Nottingham City Council has agreed to bring an energy company that needs £17.5m of investment in-house.
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.
The leader of the Labour-run authority, Cllr David Mellen, described the move as “the best way forward” at an Executive Board meeting.
Other Labour councillors agreed on the move on Tuesday, November 16.
The council is now 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.
But the city council says the company will help make back any investment in the long-term because it saves the authority £5m a year by reducing the amout of waste it has to take to landfill.
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.
But 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.
Cllr Mellen said the company was in line with the council’s plans to be carbon neutral by 2028.
He told councillors bringing the service in-house will give the company “protection and “it is the best way forward”.
After the meeting, Cllr Kevin Clarke, opposition leader of Nottingham Independents at Nottingham City Council, said: “The investment needed to bring it up to date is eye-watering.
“The problem is the system is old and needs updating and they have little choice.
“They have no idea what the pipe work is like in St Ann’s and should have done some surveys. It may well come back and bite them sooner rather than later.”