Coronavirus: Bristol City Council ignites sale of energy supplier

May 04, 2020

A local authority which has spent tens of millions of pounds of council taxpayers' money trying to build a nationwide energy supplier is admitting defeat by putting it up for sale.

Sky News has learnt that Bristol City Council has appointed advisers to begin a process of finding a buyer for lossmaking Bristol Energy's customer book.

Sources said on Monday that any sale would recoup only "a proportion" of the estimated £35m that has been ploughed into the business by the council since Bristol Energy launched in 2011.

EY, the accountancy firm, has been appointed to handle the sale process.

The company had just over 100,000 customers earlier this year, but boasted that it had taken "a significant step on its journey to becoming a wholly green energy supplier, launching three new 100% green electricity and lower carbon gas tariffs, with a focus on sourcing energy from local wind and solar farms".

One source said prospective buyers of the customer book had begun being contacted by EY to gauge their appetite for a deal.

The emergence of the sale plan will raise renewed questions about the decisions of a string of local authorities around the UK to compete with energy industry behemoths such as Centrica, the owner of British Gas, and Scottish Power.

In Nottingham, the future of council-owned Robin Hood Energy is also under review in the wake of a £24m annual loss disclosed in March.

The decision to seek a buyer for Bristol Energy's customer book comes amid expectations of a wave of customer defaults across the energy sector as the finances of consumers and businesses feel the strain of the coronavirus pandemic.

A squeeze on energy suppliers' margins and competition exacerbated by regulator Ofgem's introduction of a price cap have already forced dozens of smaller operators out of business.

The customer books of collapsed suppliers have invariably been reallocated to big six players such as EDF Energy and Ovo Energy, which was catapulted into the ranks of the industry's biggest players through the £500m takeover of SSE's retail business.

Energy UK, the industry association, recently asked the government to agree to an emergency loan scheme that would help customers requiring payment holidays.

Last month, the Department for Business, Energy and Industrial Strategy said it had reached agreement with the industry to temporarily stop disconnecting customers using pre-payment meters.

"This is a worrying time for people across the country and we would expect energy companies to take the current circumstances into account as they carry out their business," a government spokesman said.

In a statement issued to Sky News, a Bristol City Council spokesperson said: "Ernst and Young has been commissioned to provide professional advice to the council by undertaking a full and thorough assessment of Bristol Energy's structure and future business viability.

"A key objective is to mitigate the extent of any additional funding requirement from the Council beyond the existing agreed funding envelope."

Marvin Rees, the Bristol mayor, recently criticised the decision to establish Bristol Energy as "not sensible".

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