The role of co-operatives in reforming the energy sector was discussed at a fringe event at the Labour Party conference, organised by the Co-operative Party.
Shadow energy secretary Caroline Flint outlined Labour’s plans to reform the sector, including a freeze on bills and the broadening of co-operative and community ownership models. She said poor treatment of consumers and a lack of transparency proved the energy market was not working, and warned that the big six energy suppliers still dominate the market, despite some encouraging news on small suppliers.
“At the moment one of the problems is the big six generate energy, supply it to themselves, and sell it to us,” she said. “This needs to be opened up.” The big six currently account for 70% of energy generated.
Ms Flint also called for a new energy watchdog “to look at what happens to cost”. She said energy companies found guilty of treating customers badly are fined, but they can continue with these practices. “What we’ve said is that if you carry on, the watchdog will have the power to say you can no longer supply energy – they have the power now only if companies go into bankruptcy.”
She pointed to the example of Germany, whose energy market was dominated by four major companies and is set to miss its 2020 greenhouse gas targets because it burns more coal than five years ago. But energy reform has managed to transfer power from the traditional utility companies to the people, with 25% of renewable energy being owned by private individuals and farmers, compared to just 5% of the big four providers.
“We have examples already of best practices around the country, so we are not starting from ground zero,” said Ms Flint. But she argued against a top-down central government approach, favouring a plan that would enable communities to get involved and show initiative.
“The business model that Co-operative Energy has, others could have as well,” she added. “But what it does demand is absolute commitment and passion to make this work.”
Another speaker , Agamemnon Otero, chief executive of Repowering, a non-profit co-operative based in London, looked at fuel poverty. Repowering advises people on how to deliver renewable energy co-ops, with six months to set them up and another six months to work with all relevant bodies, including local authorities, to deliver the objective.
Although the current government has paid attention to the renewable energy sector, its approach has “lacked teeth”, added Mr Otero. Even though it helped set up the Community Energy Manifesto, it failed to give clear instructions to councils and developers.
“Some co-ops were used just like some charities as a charitable wrap and not doing anything towards the local community,” he said. “All of our co-ops have got through and have been eligible because we do give back to members. We have received on Brixton Energy Solar 1, 2 and 3 in Brixton EIS tax relief and hope to have SEIS on another project but we’ll see we’re part of the consultation now.”
The sector still needs to convince the Treasury of the need for tax relief, he added.
Chairing the session, Tom Greatrex, Labour/Co-op MP and Shadow Energy Minister, said a stronger case had to be made for Europe on energy reform. “The case is strong,” he said. “And actually EU institutions talk a good game about decentralising the generation of power and all related issues so if there are co-ordinating in what they are doing there shouldn’t be an issue.”
Ramsey Dunning, general manager of Co-operative Energy, believes that, with an election coming up next year, there is a possibility of a “clean start” within the energy sector. There are several elements that need to be kept in balance, he said. These are energy security, cutting carbon emissions, moving to renewables and maintaining affordability.
“We’ve been let down by the status quo,” he said. “The big six are part of that and it suits them to retain that status quo.
“The energy sector looks like a computer system from 1990s. We’ve got big companies, some big power stations and everything else runs of that.”
The alternative, says Mr Dunning, is to work in co-operation with lots of groups.
“There are a lot of challenges for independent suppliers, but a lot of that is around how to tweak again the status quo. The demand is there.”
Mr Dunning thinks the regulatory framework, which was established when privatisation took place 20 years ago, should be opened up.
“The energy industry is regulated and it needs regulation, but if we were to start with a heavily regulated computer industry, we wouldn’t have these things – what we would have would be a big terminal at home run from somewhere else.”
The session also heard how problems in the sector are being tackled at local level. Oldham councillor Arooj Shah said his council has led a collective switching scheme to address the changes brought by the welfare benefit reform. The local authority set up an auction, which involved people registering for a collective energy-switching scheme – with 9,000 people signing up.
The 4,577 residents deciding to switch saved hundreds of pounds from their annual energy bills. With the scheme being successful, the council decided to run another collective switching project under the Greater Manchester Energy Switching Scheme.
The council is also looking at setting up PV panels on community buildings, with investment from local residents. Those who invest also qualify for tax relief under the EIS tax relief scheme. The council is also carrying out a feasibility study for a local wind energy company.
Cllr Shah thinks local authorities can develop energy projects by working with communities, schools, the police and fire fighters – and they don’t necessarily have to wait for major legislation. “There is some law required … but look at what can be done locally,” he said.
The price of renewable energy
Ata separate event that coincided with the Labour Party Conference, Prospect Magazine and the Social Economy Alliance hosted a debate on renewable energy with contributions from Ben Reid of the Midcounties Co-operative and Caroline Flint.
Ms Flint revealed that an incoming Labour government would set decarbonisation targets separate from, but compatible with, the EU’s targets. This would be coupled with borrowing powers for the Green Investment Bank to enable it to borrow and attract new investment.
Mr Reid said he believed a price freeze was necessary to restore the market.
Commenting on the price of renewables, he added: “To suggest that we can have cheap energy is not an honest debate. All analysis shows the drivers are upwards and if part of that is a premium for renewables we have to be honest about that. We are vulnerable until we have more control of what we produce.”
Referring to the current Energy Company Obligation (ECO), a subsidy from energy suppliers aimed at funding energy efficiency improvements, Ms Flint said: “We will continue to have money from energy companies to help with insulations but we want every penny of that to go to those in fuel poverty.”
This would be managed by local authorities and communities, not the big six energy companies, she said.
In this article
- Agamemnon Otero
- Arooj Shah
- Ben Reid
- Caroline Flint
- Co-operative Party
- Energy development
- energy reform
- European Union
- Green Investment Bank
- Greenhouse gas
- Labour Party
- Midcounties Co-operative
- Ramsey Dunning
- Renewable energy
- renewable energy co-ops
- Social Economy Alliance
- Tom Greatrex
- United Kingdom
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