The UK’s “big six” energy providers are never far from the headlines. Whether it’s price hikes, reticence around the rollout of smart meters or most recently, mergers, it’s safe to say the major gas and electric suppliers don’t often, funnily enough, ignite a warm feeling among the general public.
The number of people switching providers has reached an all time high, with 660,000 people swapping electricity suppliers in February alone, according to Energy UK, a 60% rise on February 2017. Nearly one third (29%) of the switches for both gas and electricity in January and February represented households moving away from the big six to small or medium suppliers.
What is public energy?
If you’re looking to switch, publicly owned energy suppliers – that is, electricity and gas companies operated by local councils, where profits are often pumped back into communities – are an option. In the UK, Bristol Energy and Nottingham-based Robin Hood Energy are the two major players. And for those wishing to go both green and local, Bristol offers a renewable tariff which comprises 100% green electricity and 15% green gas, produced from local sewage waste.
A multitude of others have sprung up in recent years as well. These, such as Islington council’s Angelic Energy and Liverpool’s Leccy operate as “white label” providers, where the energy is actually supplied by Robin Hood but is administered by each local authority.
While there are certainly an increasing number of public energy companies emerging, the UK still lags far behind some other European countries in terms of the extent to which energy is run by municipalities. Germany, for example, has a highly decentralised energy system.
Public appetite
According to Bristol Energy, there are more than 170,000 households currently supplied by a publicly owned energy company. This figure comprises their own customers as well as Robin Hood’s (including white label suppliers such as White Rose).
And although public energy represents a drop in the bucket, there is a growing consumer appetite for it. A 2017 poll (pdf) by the Legatum Institute, found that 77% of people support nationalisation of electricity and gas – and calls from politicians that energy needs to move out of the hands of private companies adds further fuel to the fire. Nicola Sturgeon pledged in October last year to set up a publicly owned company in Scotland and the mayor of London, Sadiq Khan, has in his environment strategy, indicated he will tender for an energy supply company.
Fuel poverty
Some proponents of public energy cite local resilience as a benefit. Bristol Energy’s profits, for example, go straight back into the city council. They also have a fuel poverty fund that supports local families to stay warm and well. Liverpool’s Leccy, similarly, uses profits to keep prices low and to support energy saving programmes.
Such programmes could help reduce the number of people in fuel poverty across the UK, which in 2015 stood at approximately 2.5m households, or 11% of all dwellings, according to government figures from 2015 (pdf). Since 2003, this average figure has not fluctuated radically but some communities, in London for example, experience slightly more variable rates (pdf).
Cost
Cost, naturally, is a significant consideration for consumers when switching providers, and for local authorities when setting up an energy company of their own. According to David Hall, visiting professor at the Public Services International Research Unit of the University of Greenwich and author of a 2016 study (pdf) on the subject, a full transfer of ownership would likely cost around £24bn, but the investment would pay for itself in 10 years or less.
From a consumer perspective, Hall cites research done Europe-wide that found that the price of energy from public sector companies is 20%-30% lower than the price charged by private companies. In the UK, he concludes, energy bills could be reduced by £120 per household, which is a 10% slash on the average household bill.
Although some of the large energy companies such as British Gas are scrapping standard variable tariffs (SVTs) – which are typically poor value – for new customers, 57% of big six customers are still on SVTs. In the past decade, energy bills have doubled and the average annual bill comes in at £1,200. Meanwhile, according to Bristol Energy, the average cost of theirs and Robin Hood’s cheapest one year fixed national tariff across all regions is £926*.
As the big six continue to grab headlines and consumer grumbling shows no sign of abating, a more local approach quietly pushes along in the background. In terms of taking over the big six one day, Bristol Energy’s managing director, Peter Haigh, isn’t necessarily thinking along those lines but rather on the value of localism. “It’s less about the height of the hill and more about the direction of travel,” he says. “People care about their community, about their wellbeing, and about keeping things local. Energy suppliers can play a part in that. It’s not about competition, it’s just putting people first.”
*Correct at 10 May 2018
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