Co-operative Energy: Beyond 2015 Is Britain facing an energy crisis?
At a Prospect and Co-operative Energy panel on September 25 at the Labour Party Conference, the Shadow Energy and Climate Change Secretary Caroline Flint confirmed that the energy prize freeze is still a key part of Labour’s election manifesto, and would be the subject of emergency legislation if her party were to win in May 2015.
Flint outlined why she feels energy market reform should be a priority for the next government, and discussed Labour’s plans for a new watchdog to replace Ofgem. The proposed new body would have tougher powers, and be in Flint’s words “the champion of the consumer.”
With the big six energy companies still dominating the domestic market by 93 per cent to 94 per cent, the lack of competition is a key cause of concern for the Labour party. “They [the big six] also dominate something like 70 per cent of the generation of energy,” says Flint. “Which means that part of their business model is generating energy, selling it to themselves and selling it on to us. It’s difficult to then work out whether the wholesale cost of energy, before government asks anything more of them, is actually a fair one.”
According to Flint, about £90m worth of fines have been imposed on the “big six” in the last 10 years, yet there are still around 15 investigations currently in process relating to customer service. Labour’s plan to counteract this would be to give their new watchdog the power to cut off the offending company’s supply completely if they failed to improve their customer service. “When you find that there’s been evidence of predatory pricing, misselling and people being actually encouraged to change their tariff within their own suppliers and then find out that actually they’re even worse off than they were before. There’s something really bad in the way in which these companies work.”
Ben Reid, CEO of Midcounties Co-operative, agreed with Flint on the need for reform, saying: “It’s even worse from the inside than it looks from the outside. I have been amazed at the practices I have observed within the competitive sector.” The Co-operative are striving for a different, more community-focused approach. “We didn’t establish ourselves just to go out to create an energy business and make some money out of it,” said Reid. “We came in because we thought we could change the game around energy… We are a co-operative owned by our members and that changes the mindset of the people who work in the business. The people on the end of those phones are our owners and should be dealt with properly.”
Co-operative Energy, which now boasts 200,000 customers, has succeeded in achieving its low carbon targets by sourcing energy from renewable generators such as wind, hydro and biomass. “This is a national business. We want to show that it can work on a scale,” says Reid. “We wanted to treat our customers fairly. We wanted to conduct ourselves responsibly. And we wanted to champion a low carbon economy.”
Climate change has significantly risen up the political agenda since Flint first became an MP in 1997. She touched upon the need to invest in renewables and reestablish Britain’s nuclear capacity and mentioned the new opportunities for more community-based solutions to Britain’s energy questions such as cooperatives, local authorities playing a role and the raft of new opportunities to challenge the traditional energy market structures.
Co-operative Energy’s modernising approach was inspired by Germany’s energy strategy which is highly community focused. The German approach has driven investment, interest and political acceptance, which in turn has helped fuel the creation of a significantly stronger market for green energy. “That’s where we have to focus our efforts now. To get the government of the day to understand that if you can engage people at the local level, then we can move this thing forward. It’s been suggested in the fracking debate that giving local authorities a bit of a sweetener will allow better, easier planning consent. That’s not touching it at all. It’s about saying—this is our village, this is our community and we should be engaged in this. If we do it right then maybe we can all benefit.”
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