Details emerge of power plan
State-owned energy firm ‘operational by 2021’
A new household power company would challenge existing suppliers
A new state-owned company supplying household power to Scottish households could be operational by March 2021.
Proposals for a working model are set out in a consultancy report to the Scottish government which announced its plans for a taxpayer-owned utility last year.
One of the options is for a national provider to sell electricity and gas through local councils, while there is a ‘white label’ option to sell-on power bought from existing suppliers.
First Minister Nicola Sturgeon unveiled her plans at the SNP conference in October as a means to challenge high energy prices.
A report from EY estimates the cost of setting up the company at £3.5m, with first year running costs at £9m.
However, it has warned that there is already tough competition on price, with 42 rivals in the Scottish market.
EY has also highlighted the risk to the Scottish government of making a loss. Of those 42 firms, half reported a loss in their most recent accounts, including two of the so-called “Big Six”.
More than half of them highlight their competitive prices in trying to attract customers.
There are energy suppliers run by councils, including Robin Hood Energy, run by Nottingham City Council and supplying to Liverpool and Islington under a white label agreement.
EY’s report to ministers concluded: “It is possible to establish an energy company to achieve the stated objective of delivering competitively priced energy to help alleviate fuel poverty in Scotland.
“We recognise, however, the challenges of doing this in a highly innovative, competitive and evolving energy retail market.”
“The over-riding strategic question for the Scottish government is how to make the energy company cost competitive, in a low margin market.”