Bristol City Council-owned energy company Bristol Energy is reportedly running at an £8.4 million loss – despite there being £17.3 million of taxpayer’s money invested in it by the authority.
Local press reports claim the council rejected Bristol Energy’s latest draft business plan, as it was not satisfied with its projected number of customers.
A council source also revealed concerns have been raised about the time the firm will take to pay back its sizeable loan – which will continue to increase as the council pays it an undisclosed annual fee. The money the authority has invested in the company makes up a sixth of its £108 million five-year deficit.
But managing director Peter Haigh told Utility Week today that it was business as usual: “At Bristol Energy, there’ll always be more scrutiny of our plans, and rightly so. We’re a council-owned energy company. But we didn’t plan to make a profit in year two of trading, and we remain on track to start repaying back to the council as planned in 2021.
“We’ve hit all our key milestones this year, and the council remains fully supportive. Many councils are financially strained at the moment, and difficult decisions are being made.
“This is one of the reasons Bristol Energy was set up: to be part of the solution, as an additional source of income for the city. We’re saving Bristol residents around £200 a year. The more people that join us, the more money we can save for the city, and the sooner we can deliver a return to Bristol City Council.”
The company, which provides gas and electricity to almost 65,000 customers including 13,000 in Bristol, was launched in February 2016 to be a “force for social good” and had an original target date of 2019 to become profitable, which was subsequently revised.
The company saw more customers join in 2017 than expected, and fewer leave. It has also received favourable reviews from consumer body Which?.
It is not yet known what solutions for faster repayment the company might put forward with its revised plan, but one option could be to buy more customers from other energy firms, to speed up the time it takes to reach the key economies of scale to turn a profit.
Speaking to Utility Week last summer, Haigh said after a “fairly challenging” first year, it expected to be in the black by 2021.
The energy supplier, he said, should be able to become “cash neutral”, when it is “not a burden on the city in terms of needing working capital” – and that it would turn a profit about 12 months after that.
The latest reports come against a backdrop of tension for smaller energy companies, as Future Energy became the latest small supplier to feel the bite of the competitive retail market last week and announced its closure. It was the second supplier to be left out in the cold this winter, behind Brighter World Energy, which closed in December.
Both followed in the footsteps of GB Energy supply, which was forced to shut up shop a year ago, having been caught out by rising wholesale prices in the power market.