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Warning of high expectations

MSPs question viability of state-owned energy company

Electricity bill

Will a state-owned company offer cheaper electricity?


 

MSPs are questioning how the Scottish government plans to build a viable customer base for its publicly-owned energy company in what is a crowded market peppered with failures.

The Scottish Government made a commitment in October 2017 to establish a not-for-profit, state-owned company to supply energy to consumers at as close to cost price as possible.

But with eight energy suppliers collapsing this year alone, a Holyrood committee has raised questions about how the new company would add value and offer a cheaper alternative to what is already available.

The Economy, Energy and Fair Work Committee has warned of the dangers of placing such high expectations on the company.

Gordon Lindhurst, committee convener, said: “In an already crowded market place, we would like to see a clear mission statement on how the company plans to build a sustainable customer base, how it will operate, how it will align with existing initiatives, and what extra value it will add.

“With so many expectations placed upon a publicly owned energy company, there is a danger it ends up pleasing nobody,” he said.

“We hope that will not be the case and – for the sake of affordable fuel bills and decarbonisation – it has to be smart with its aims and strategic in its thinking.”

Since consumers across the UK were encouraged to shop around for the best deals almost five million have switched to one of more than 70 energy suppliers now operating in the market.

They have lower running costs and do not have to pay towards expensive government schemes. However, as they cannot buy as much power in advance, they are more vulnerable to sudden increases in wholesale prices.

OneSelect recently became the eighth energy minnow to go bust in 2018. More than half-a-million homes have now been hit by the collapse of nine energy firms since November 2016, according to watchdog Ofgem.

Executive at failed firm back in business

Questions about the viability of a Scottish publicly-owned supplier come as a senior executive at one of Britain’s most complained about energy suppliers is planning a new gas and power venture, just weeks after his former employer collapsed.

The energy regulator has granted a licence to Extra Energy’s former managing director, Ben Jones, just one week after it was forced to put in place a bailout plan for the company’s 100,000 stranded customers.

At the time of its collapse, Extra ­Energy ranked among the worst for customer service, had lost almost three quarters of its customers, and failed to pay millions for renewable energy subsidies, which were claimed through customer bills.

See also:

Comment: Rejected energy merger points to end of state-run plan

 

 

 



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