Nottingham City Council is moving ahead with plans to spend millions of pounds trying to protect the future of another one of its energy companies.
The Labour-run authority is due to confirm a deal on Tuesday, November 16, which will see its Enviroenergy operation brought in-house.
The costs associated with the project are not part of the public report prepared for the Executive Board, with some of the files labelled as exempt.
But in August, the local authority said it will have to pay at least £17.5m to prop up the services of Enviroenergy – which provides power to 5,000 city homes.
This comes only 12 months after the council’s Robin Hood Energy company collapsed, ultimately leaving city taxpayers to cover anticipated losses of more than £38m.
Now the council is planning to liquidate Enviroenergy – which it has owned since 2001 – and take the running of the firm’s services in-house.
The transfer will cost taxpayers an anticipated £500,000.
During the last two decades, Enviroenergy – which has 32 staff and is based on London Road – has been given a number of loans by Nottingham City Council. More than £11m of these loans remain unpaid.
The company’s outstanding debt will be taken over by the council when Enviroenergy is liquidated.
The council says Enviroenergy has been “profitable since 2013, with the exception of 2017”.
However, EnviroEnergy’s company accounts show these profits do not cover its long-term liabilities.
If it closed today, Nottingham taxpayers would have to pick up the tab for up to £4.6m of liabilities, depending on how much of the more than £3.2m of assets – including old pipes and machinery – it was able to sell on.
This figure would be even greater if the £3m the company is currently owed by debtors was also not collected.
Enviroenergy provides heating and hot water to around 5,000 homes in St Ann’s and 70 commercial businesses, including the council-owned Motorpoint Arena and Royal Centre.
But its ageing network needs urgent upgrades, which Enviroenergy cannot afford.
Nottingham City Council says it has no option other than to liquidate Enviroenergy and take over the company’s heating services.
The council says Enviroenergy saves the city “approximately £5m annually” because it removes the need for Nottingham to send waste to landfill sites.
The council pays to have its non-recyclable waste burnt at Eastcroft incinerator on London Road.
Power generated by the incinerator’s steam is then sold on to customers in St Ann’s, by Enviroenergy.
The council says it needs to spend £17.5m to ensure it can continue to provide services to EnviroEnergy’s 5,000 existing customers.
The money will be used to upgrade the heating network – including boilers, meters, pipes and pumps – and the customer billing systems, between 2022 and 2026.
The council said closing down the Enviroenergy heating system was not an option as the complexity of the infrastructure means its 5,000 customers cannot immediately receive energy from other providers.
On November 16, the council is planning to “approve the transfer of all property, rights and liabilities in the Enviroenergy business to Nottingham City Council” and that “following the transfer of assets and liabilities to the council, Enviroenergy can be liquidated whilst solvent”.
The permits and licences necessary to give legal entitlement to operate the service are prepared for transfer to the council from the company on December 1 this year.
The council report states: “Enviroenergy provides low carbon heating to some of the most deprived parts of the city. Its ability to operate effectively is a critical part of the Council’s Carbon Neutral Action Plan and other policies.”
