Sturgeon stuns Scottish Power, SSE and other Big Six suppliers with new Scot-Govt plan to set up not-for-profit energy company

Scottish First Minister Nicola Sturgeon, MSP
Scottish First Minister Nicola Sturgeon, MSP

The SNP-led Scot-Govt is to set up a publicly-owned, not-for-profit energy company to deliver low-cost renewable energy.

This announcement – which stunned the Big Six dominant British energy providers – was yesterday by Nicola Sturgeon, Scottish First Minister (and SNP leader) at the party’s annual conference in Glasgow.

And it equally-stunned Energy UK – the British trade association for Big Six – and other energy providers – into an astonished silence, especially as the two Scottish Big Six suppliers (SSE and Scottish Power) have hitherto enjoyed ‘special status’ relationships with St. Andrew’s Hoose.

She said: “We will fulfill our manifesto commitment by delivering a <Scottish> government owned energy company to work for the collective good. The company will buy energy wholesale or generate it here in Scotland and sell it to customers as close to cost price as possible.”

Although scant on details, Sturgeon added that the Scot-Govt energy company would offer green energy at cost price by 2021. The only precedent in the UK is Nottingham City Council, which operates the Robin Hood Energy company.  

She said that the objective would be to “give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers.”

Throwing down the political and energy gauntlet to Britain’s Big Six energy providers – who include the Scotland-based SSE and Scottish Power utilities, Sturgeon said the new utility would provide gas and power to households “as close to cost price as possible.”

It would be operational by the end of the current five-year parliamentary term, delivering on a pledge she made at the last vote, she said.

Her announcement sent shares in Centrica plc – which owns the ‘Scottish’ and ‘British’ gas brands – tumbling to a 14-year low.

Sturgeon told party delegates: “The idea, at its heart, is simple. Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possible.

”No shareholders to worry about. No corporate bonuses to consider.

”It would give people – particularly those on low incomes – more choice and the option of a supplier whose only job is to secure the lowest price for consumers.”

She said more details would emerge when the government publishes its new energy strategy, but added that it would be up-and-running by the end of this parliament.

It is understood it will serve the Scottish market initially, but could venture further afield.

A spokesman for one of the public firm’s potential competitors, the Spanish-owned utility Scottish Power, said: “We welcome new entrants in to this vibrant market.

“We offer competitive prices and we have worked hard to get most of our customers on to fixed price deals, well ahead of any of the other major suppliers.”

Sturgeon’s statement was welcomed by Scottish and British consumer groups.

Craig Salter, energy spokesman for Citizens Advice Scotland’s Consumer Futures Unit, said: “As Scotland’s consumer champion we welcome this intervention and we hope that it will see the energy bills of some of the most vulnerable households fall.

“Those Scots who are in receipt of the Warm Home Discount are likely to be financially vulnerable and be less engaged in the energy market, and it is particularly important that they receive prompt protection from unaffordable energy bills.

“This is only a first step towards making energy bills more affordable – in just the last year, already expensive standard variable tariffs have risen at three times the rate of inflation. Fuel poverty rates in Scotland remain unacceptably high and consumers can face higher energy bills due to the cold wet climate and higher costs in some areas. We would therefore welcome any action that makes energy bills more affordable for all consumers.

“We would encourage consumers struggling with their energy bills to visit their local Citizens Advice Bureau, and energy companies to take action to move their customers to more affordable tariffs.”

Alex Neill, Managing Director of Home Products and Services at Which? – the British consumers’ association – added: “Millions of Scots worried about energy prices will welcome action to tackle their rising bills.

“The Scottish Government must ensure that this intervention really does deliver a fairer deal for energy customers. For now, customers sitting on expensive standard variable tariffs should look to switch to a better deal straight away.”

12 Oct 2017

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed