White Rose Energy: return of UK local government to utilities

White Rose Energy opened to customers in September 2016, described on its website as a not-for-profit gas and electricity provider with a ‘social motive’. Run by Leeds City Council in partnership with Robin Hood Energy, in turn owned by Nottingham City Council, White Rose Energy forms part of a global re-entry into the utility supply by the local state (see remunicipalisation.org for a global map of water remunicipalisation and if you have access Hall et al, 2012, on developments in France and Germany). Rather than trying to summarise a phenomena that has significant variation at a national and regional level, which Moss et al, 2014 explore in the German context, this post will focus on contrasting the stated motivations and methods of this Yorkshire variation of remunicipalisation[1] with a similar process in Hamburg during 2013. The closing paragraphs aim to locate these events within broader changes in UK local government.

There are immediately obvious differences in the approaches taken in Leeds and Hamburg, particularly in the different ways of entering the energy market and motivations for doing so. A desire to return utility supply to public ownership as part of an ideological project for the sake of public ownership is notable by its absence; rather the intervention of the local state is framed in instrumentalist terms as part of a wider political project. Each of these projects is a challenge, to differing degrees and in different ways, the priorities and practices of private management.

Remunicipalisation shows the capacity of the local state to advance political agendas outside the realm of governance and political decision-making, for White Rose Energy this has been termed as a social, rather than economic or environmental, motive. The ‘social motive’ is prominent in White Rose Energy’s promotional and descriptive literature, with the company’s ‘About Us’ page distancing the new municipally-run utility from profit-orientated energy providers of the Big Six. (See Ofgem’s 2016 report on levels of customer complaints to energy suppliers or the Which? summary of this.) Instead the central message is one of “low cost energy to all households” thanks to “fair and competitive pricing” and wider “reinvestment into initiatives to reduce fuel poverty”. All bracketed off with the inevitable picture of presumably Yorkshire countryside, complete with dry-stone walling.

In Hamburg, the stated motivation is instead one of sustainable energy production, combatting climate change and the city’s green credentials. The Guardian provides a helpful overview of events leading up to a 2013 referendum in Hamburg that authorised the city government to “take all available steps to completely take over the electricity, gas, and district heating networks”. Taking such ‘steps’ raises the broader context of a comparably de-centred model of energy production and consumption in Germany that has defined the policy of Energiewende and embracing of renewables. Last, there is the fact that the Hamburg city authorities are not launching a market competitor to challenge the priorities and practices of existing suppliers, but working to nullify the local energy market.

The emphasis on a ‘social motive’ from White Rose Energy and green credentials in Hamburg tell us about the differences between the British and German energy infrastructures and their different underlying concerns. Just as an emphasis on sustainability turns the mind to questions of fossil fuels, nuclear energy, renewables and ultimately to climate change, raising the social turns our attention to the wider societal context that shapes how much each of pays for our bills each month. The familiar mix of post-2008 factors is here, with rising costs of living, persistent wage stagnation, increasing levels of household debt and an inaccessible housing market defined by shortages in both private and social housing. (Shelter’s Why We Need More Social Housing campaign gives an informative summary of the situation in England). All compounded ongoing retrenchment and the unknown effects of the yet-to-be-established terms of leaving the EU. An emphasis on the ‘social’ over the ‘sustainable’ as the political priority makes more sense in this light, with local authorities identifying entering the energy market as a form of mitigation for at least some of these issues.

In doing so we can see from Leeds (and Nottingham) City Council not only a willingness to use the energy market as an area of policy delivery, but also the consequences of changes the legal standing of English and Welsh local authorities thanks to the Coalition Government’s Localism Act 2011. The Act provides a ‘General Power of Competence’ that reverses the legal standing Councils, so that rather than being permitted and required to undertake only specific activities, e.g. housing, education, roads maintenance, environmental management, bin collections, etc., Councils are now;

“freed to do anything – provided they do not break other laws […] It gives local authorities the legal capacity to do anything that an individual can do that is not specifically prohibited; they will not, for example, be able to impose new taxes, as an individual has no power to tax.”

(See the ‘plain English guide’ to the Localism Act‘)

The result being that enduring austerity for local and national government continues to reduce the options available to local government to act through traditional forms of government, such as to alleviate fuel poverty through direct financial relief or subsidy to individual households as budgets have shrunk. The ‘general power’ is allows local authorities to enter the energy market as providers, deliberately targeting those citizens most in need of low energy bills. Direct intervention, and risk taking, in the market has therefore becomes an option available to local authorities wanting to address issues such as fuel poverty. Nottingham City Council’s choice of ‘Robin Hood Energy’ functions both as local branding and as a hardly subtle reference to wealth redistribution and pre-occupation with social justice.

Beyond utility supply it is this same ‘general power’ that allowed Lambeth Council to create Homes for Lambeth as a ‘special purpose vehicle’ and lease this ‘SPV’ public land, primarily social housing estates, to be managed by it. This for-profit ‘arms-length’ ownership structure is described in a chirpy-promotional video (see previous link) as allowing Lambeth council, via Homes for Lambeth, to borrow money against public land and so build more social housing and address the kinds of social problems, especially in London affordable housing shortage, identified above. Lambeth Council describe this as being in response to funding cuts and to enable the council’s regeneration programme, however with long running battles between residents of Cressingham Gardens and Lambeth Council concerns about transparency and accountability for the day-to-day and long term management of housing estates, have been raised. (I plan to return to this topic – and other developments from of the ‘general power’ – in future posts.)

In White Rose Energy the consequences of both austerity and localist reform are coalescing and being expressed as a form of state intervention in the market. Here, the ‘empowerment’ of local authorities is an empowerment to accept market risk, with risk accepted as part of local government attempts to pursue policy agendas. Yet empowerment also requires local authorities to embrace ‘novelty’ in achieving these policy agendas, embracing the logics of the market and hoping to re-purpose them for particular goals. Such empowerment brings with it a utilitarian balancing of cause and effect, as the potential risks of market are balanced against the certain decline traditional resources of local government.

Notes:

[1]The return of energy/water/utility supply to municipal control.

Additional References [open access]:

Catney, MacGregor, Dobson, Hall, Royston, Robinson, Ormerod & Ross. (2014). Big society, little justice? Community renewable energy and the politics of localism’. Local Environment. 19:7. pp.715-730.)

 



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