Britain’s Big Cities could replace Big Six utilities

electricity billsBritain’s big cities could set themselves up as big utilities to transform efforts to create a cleaner, smarter and more affordable energy system, provide an alternative to the big utilities, and boost their local economies in the process – according to a new study by the IPPR think-tank.

Benefits from its proposals would include lower household bills, more jobs and greater diversity in energy sources, the institute said.

The Institute for Public Policy Research (IPPR) said many of its suggestions could already be delivered through existing powers held by local authorities.

Low-income consumers are being overcharged: low-income households tend to be on more expensive tariffs, such as prepayment meter tariffs, and are overrepresented among consumers who have never switched supplier in order to find a better deal. In 2013, the gas bills of customers who had not switched supplier since the market was opened to competition were on average £76 higher than those of customers who had switched (IPPR 2014).

The electricity bills of customers who had not switched supplier since the market was opened to competition were, in 2013, on average £27 higher than for customers who had switched.

A Local Authority Energy Unit should be created within the Department for Energy and Climate Change that brings together guidance for cities and local authorities relating to energy supply, heat delivery, energy efficiency programmes, renewable energy deployment and access to finance. This unit should harmonise the expertise and advice that is currently held within different areas of the department.

 The UK government should echo the European Commission and encourage all UK pension funds, including local authority pension funds, to adopt the Principles for Responsible Investment (PRI). Responsible investment principles should be enshrined in domestic legislation, as they have been in many other countries.

Fiscal rules should be designed to ensure that local debt for capital expenditure from local authority bonds or green municipal bonds do not count against legitimate targets to bring current spending back to balance in the medium term.

The Green Investment Bank should continue to work with cities on low-carbon energy projects, and it should be given borrowing powers immediately.

For example, Aberdeen council is building on its abundant supply of local renewable wind energy, the city is pioneering the use of hydrogen as fuel. Hydrogen, produced from water using the electrolysis technique during periods of excessive renewable generation, is being used to power the world’s largest fleet of hydrogen buses (ACC 2013).

Within the energy supply secure, the IPPR said councils could look at a broad range of options, including setting up joint ventures or partnerships with existing suppliers, offering “white-label” products or becoming fully-licensed suppliers themselves

Councils could work with the Green Investment Bank or with the Local Government Pension Scheme to raise finance for investment in infrastructure, the report said.

  • One of the report’s authors is Will Straw, a prospective Labour party parliamentary candidate and son of MP Jack Straw, a former Home Secretary.

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