Why are Sutton Council Going into the
Energy Supply Industry?
The proposals being considered are based on transferring waste heat from an incinerator located in Beddington through two pipes to a yet to be constructed development in Hackbridge.
The London Borough of Sutton as far as far as I am aware has no current expertise or a proven track record in energy supply.
Liberal Democrats believe in a liberal economics that gives the consumer choices. However once Felnex residents are tied into the proposed SDEN they will be stuck with the London borough of Sutton as their sole source of energy for heat and hot water.
As we all are aware energy prices are a controversial issue if we are going to charge a monthly fixed fee of around £20 and a variable price of 8 pence per kilowatt hour this will raise prices higher than those paid by the average household,
The Felnex Residents will have no choice in the matter should they wish to switch energy suppliers. Hopefully it will not have escaped HEB members notice that next week SHP are going out to get a better energy deal l This luxury of being able to shop around and get the best price will not be available to the residents of Felnex if the SEDEN proceeds I would think this alone would mean that it would be contrary to any notion of the basic principles of Liberal Democracy. The proposal made at the meeting on the 12 February that residents would be a forced to use only heat supplied by SDEN is more reminiscent of Stalinist Russia diktats than the principles of a modern mixed liberal economy As Councillor Garratt remarked we cannot enter Felnex resident’s premises to search for clandestine heaters or demand they switch of electric blankets to ensure the financial viability of the SDEN If a bank was looking at the business case for borrowing £3.5 million to fund this enterprise one of its considerations would be the Boroughs previous track record in commercial enterprises.
The Life Centre would I believe act as a black mark against the Council having consumed over £6.5 million of taxpayers money to provide a service which many would argue was never needed or wanted . The centre continues to lose money because the business case put was weak and unrealistic and insufficient market research to gauge demand or likely visitor number.
We do not need to go to the bank to borrow the money but we must remember that we are custodians of tax payer’s money. People have had to work hard and make sacrifices to make money which is taxed and we must not squander
Considerable work has been done into looking at the potential costs and income of the SDEN and my analysis is the business case is very weak, it is based on the fact that people will be happy to pay a standing charge of £20.00 per month and over 8pence per Kilowatt hour for heating and hot water.
This is against current gas prices of £8.00 per month standing charge and 4 pence per kilowatt hour. There will be ongoing costs if people have gas central heating but I believe these have been considerably overstated in order to justify charging an excessive price for SDEN supplied energy.
I realise that Felnex is meant to be stage one of this development and that economies of scale can be achieved by piping heat to Saint Helier. The question is Does St Helier want waste heat from Beddington? What would it cost to run the heat to ST Helier? What would it cost the Hospital to convert its heating system to run with waste heat? Has anybody spoken to ST Helier about this?
Then there is the ongoing potential liability of running the service and trying to make it viable, in its present form it is unlikely to make money or to break even this is because large amounts of capital expenditure are required before any cash returns all seen the fixed guaranteed income even when the whole 725 dwellings are constructed will only be £15,000 per month.
The variable cost of variable income is purely dependent on how much hot water for heating the dwelling read the occupants use. I have tried to explain if you are living in a flat or apartment that has the level of heat installation found in these dwellings means there will be considerable heat again from the occupants and from electrical appliance.
As a council we must look to our strengths and I believe that we do we are not strongly positioned to get involved in selling waste heat,there are no commercial reasons why this venture will succeed and deliver good value to the customers or provide any income to the council. It could in the worst case it could be an ongoing liability and cause many problems for years to come
- Crazy eco rules that are turning modern homes into ovens: Daily Mail Article
- Why are Sutton Council Going into the Energy Supply Industry?
- Concerns about competition and fairness surrounding Opportunity Sutton Limited its relationship with Viridor and any potential developers of Felnex
- District heat users – are you happy with your service?