Public energy company: outline business case

9 Appendix B – Outcomes of stakeholder engagement events

Stakeholder Event One - 27^th November 2018

On 27th November, the OBC team and Scottish Government hosted a workshop event with Local Authorities from across Scotland to discuss key issues associated with the development of an OBC for a Public Energy Company for Scotland. The agenda for the event was as follows:

10:30 - Arrival, tea & coffee

10:45 - Neil Ritchie, The Scottish Government

11:00 - Michael Berrington, Grant Thornton

11:15 - Tom Maclennan, Aberdeen City Council

11:30 - Morning Discussions

What do communities want, or need?

• What do you believe are the main issues facing communities regarding energy supply?
• How can these needs be reflected in what the public energy company provides?
• How will reflecting these requirements meet our objectives of tackling fuel poverty/economic development/carbon reduction?

An innovative energy company

• What other innovative energy business models have you thought or heard of?
• Which of the suggestions seem most deliverable, not just now but in a few years' time?
• How will these best deliver for fuel poor households in your area?

13:00 - Lunch

13:45 – Afternoon Discussions

White Label supply

• What can we achieve through a White Label supplier?
• What are the pros and cons of national contracts versus local contracts?
• What criteria are important in choosing a White Label supplier? (Price? Provision of social obligations? Renewable percentage?)

How to move forward?

• What barriers are there to you setting up an energy supplier?
• How do you see your role in the process of delivery and what support might you need?
• What is our role in future generation and heat networks?

15:15 - Next steps

15:25 – Closing

What do communities want, or need?

The below explores the issues faced and the suggested ways in which these needs can be reflected in what the public energy company provides.

Fuel Poverty and the cost of energy

• Some attendees believed that the question regarding needs vis a vis energy supply should be reframed as the issue is not about supply but rather price. Essentially, it's all about price in tackling fuel poverty. There were discussions later in the day surrounding who was in fuel poverty in Scotland. It was suggested that there is, perhaps, disproportionate focus on social housing when those living in the Private Rented Sector (PRS) or owner occupiers are more likely to find themselves in fuel poverty. Whilst social housing may provide a 'low hanging fruit' in that properties are easy to access and it's often easier to roll out schemes to social housing, it's paramount that the OBC recognises the diversity of households that find themselves in fuel poverty.
• Following on from the discussion on price, it was suggested that the Public Company Energy could allow multiple pricing structures – communities will not necessarily expect equality of pricing, hence multiple tariffs should be explored in the OBC. Attendees suggested an increasing block tariff model– high users pay more per unit after a certain set limit (this would mean high users subsidise others.) Price could be reduced/increased depending on demographics (like a progressive taxation) – e.g. a social housing tenant would pay less, and private companies pay more.
• Prices could increase with increased electricity usage, for instance if you had a swimming pool/ a large house you would pay more for your electricity. This would further deter people from excessive energy usage, incentivising efficiency, sub sequentially, reducing emissions.
• It was suggested that when creating a Public Energy Company, the role of standing charges should be considered – for many this is the bit that 'hurts' regarding energy pricing. Some delegates explicitly stated that the standing charge needs to be scrapped.
• The question was posed as to whether the Public Energy Company could avoid ECO obligations. By losing this 'add on' cost, then the unit cost could be brought down. Do questions regarding fair competition then arise?
• The majority of attendees believed that, in order for uptake to be successful, the Public Energy Company must offer the cheapest tariff for fuel poor households. Whilst price is clearly important, others stated that if, for whatever reason the Public Energy Company is not the cheapest, then the superior quality of the PEC must really be highlighted to prospective consumers. Many discussions centred on how the price of energy can be kept low under the Public Energy Company – concerns were raised about the ability to drop price when buying from a White Label.
• Delegates asserted that the Public Energy Company should be not-for-profit and all surplus should be reinvested.
• Regarding price the price of gas vs electric also came up in conversation as a consideration in the Public Energy Company. Consumers will not switch energy source if the counterfactual source is substantially cheaper.

Quality service and advice

• One of the barriers to switching to the Public Energy Company is customer inertia. Consequentially, switching needs to be easy and accessible; ignorance, lethargy and mis selling were all cited as reasons consumers do not 'shop around' and switch.
• There was support in the room for the Public Energy Company to provide genuine, independent advice on energy saving and energy tariffs. This is something that the Local Authorities are already doing through their advocacy model whereby local advocates go out and provide energy advice to householders. Renfrewshire currently has 4 advocates who go out to all residents to give advice, other places have advice shops which people can attend. Many delegates believe that the provision of independent advice alongside the Public Energy Company is intrinsic to it being a trusted and successful entity. In addition, it's important that customer service, and how this is managed is considered as the quality of customer service underpins how an energy supplier is perceived.

Renewables and supply

• Attendees discussed the increasing interest in renewable energy amongst the general populace. Given young people's interest in the environment and sustainability, it was suggested that the 'green' nature of energy supply will be more important to the homeowners of tomorrow than the price.
• Despite having an interest in renewables, many communities lack the knowledge of how to generate their own energy so there needs to be support with regards to that.
• Delegates advocated purchase of local low carbon electricity generation as part of the value proposition for the Public Energy Company. Local generation brings with it a myriad of perceived benefits including local jobs. "We have opportunity to generate energy in different ways across different parts of Scotland – it could become a world leader in being carbon neutral country."

Infrastructure

• Infrastructure remains another issue, especially given the large proportion of households in Scotland that are off gas grid.
• It was highlighted that connecting local generation to the network can be expensive, and developers want to plug in and go and there is not always the infrastructure or resources for this. Many delegates stressed that DNOs need to be better equipped to pick up decentralized energy production

The main issues facing communities were identified as: fuel poverty, carbon reduction, unit cost, security of supply, switching (associated difficulties). Some delegates expressed the opinion that it is difficult to see how a White Label can deliver what is required. A further suggestion is that there needs to be a unique selling point of the Public Energy Company – perhaps it is that any profit would be reinvested locally?

2. An innovative energy company

In addition to the examples provided to delegates, some innovative energy business models outlined were:

a) energy as a service,

b) the subsided tariff model,

c) bespoke tariffs,

d) collective switching,

e) aligning with EV roll out (energy storage),

f) smart appliances,

g) higher tariffs to help fund energy projects, and

h) a model focused entirely on local authority tenants.

The deliverability of various models was assessed, a few of these assessments are included below

Name of business model: Energy as a service

Scoring Criteria	Posititve	Neutral	Negative
Set up cost		I	I
Price for consumers		II
Complexity	I		I
Sustainability		I	I
Contribution to Fuel Poverty	I	I

N.B: Price for consumers would be skewed under this model and the model would have to be made as a simple as possible for customers

Name of business model: Reduced/subsidised bill for fuel poor

Scoring Criteria	Posititve	Neutral	Negative
Set up cost			II
Price for consumers		II
Complexity			II
Sustainability			II
Contribution to Fuel Poverty	II

Based on the deliverability matrix, the following models/ideas were perceived to be the most 'deliverable' by attendees:

- Aligning with EV roll out

- multi tariffs (whereby the more well off you are the more you pay for your energy)

- focusing on local authority tenants/social housing.

• In terms of EV integration, it was specified that electricity from vehicles would be sold back to the grid. Attendees discussed how developments would need to have a minimum requirement re number of EV charging spaces if we were to see wide scale deployment of electric vehicles and the subsequent EV integration model outlined.
• Under the local authority housing model, void properties would have to be steered towards the Public Energy Company by all 32 local authorities. However, there were concerns raises that social housing would be used for 'easy profit' or as a sort of 'guinea pig'. There was also concern that LAs would lose the c£80 per property they currently receive from energy companies for ''void switching''.
• Attendees stressed that it is worth noting that a higher tariff for certain demographics would need to be sold in the right way as it is a hard sell.
• Proposals to include smart appliances in terms of 'smart grids; - storage provision were caveated with the face that this would be difficult to utilise in rural areas.
• One group of delegates promised a new business model whereby there would be a fixed price (energy as service) for those in fuel poverty, but simple variable pricing for others. Defining the boundaries re fuel poverty would be important here and they recognised that some would benefit from this model, whilst others wouldn't so much.
• The merits of smart meters were discussed in relation to the model which focuses on Local Authority tenants/social housing as they can help advocacy and encourage efficient energy usage. Delays in the smart meter rollout would therefore undermine the deliverability of this model at present.
• Using excess wind/solar to provide free hot water storage could be explored as a potential model.
• Business tariffs could be used to help subsidise fuel poverty – this could be put into lease contracts.

3. White Label Supply

What can we achieve through a White Label supply?

• A national approach could provide necessary scale to get a White Label deal.
• Income could provide a revenue stream for energy efficiency work.
• Connection with citizens
• Delivering policy objectives
• Encourage switching – a branded offer helps this.
• Reduced risk vs alternatives
• Benefitting from expertise
• Economies of scale
• Marketing power
• Encourage people to get off a standard variable tariff.
• Potential to get the best value
• Extra competition in the market – comp goes up, prices go down
• Different set of social and ethical objectives.

Barriers to White Label supply and considerations

• Is the social focus going to put off some potential suppliers?
• Will terms of White Label be affected by number of projected customers?
• Considering the impact on White Label suppliers resources if they have a sudden influx of new customers as a new supplier.
• Looking at local authorities' voids will give us a quick idea of initial take up of the Public Energy Company.
• Population density (very asymmetric) serves as a blocker to getting a White Label but a bigger public sector tender may help this.
• A proposal was made to split the country in terms of its needs and have several different White Labels. It could be split regionally, for example North, West, East, South or by community characteristic.

Pros and cons of local and national White Label supply

	Advantages	Disadvantages
Local	High levels of trust in local brand. LA may be viewed as apolitical, which could be beneficial. Ability of (some) local authorities to generate customer numbers is good. Can utilise local generation. Potentially more opportunities for face to face advice and support. More reactive to, and understanding of, local needs. Flexibility to tailor offer. There are already the existing communication channels in place (Local Authority housing offices, press etc.) Local contracts = local community benefits through procurement. Tariffs can be tailored to local needs (for example, rural tariffs were one suggestion) Opportunities to link with local renewables.	Reputational risk, especially given that LAs have little influence over the White Label Supplier. Unattractive off to the market dueto the low number of potential customers. Capacity and skills within Local Authorities may not exist. Reduced buying or negotiating power. Cost replication x 32. 32 inconsistent brands could emerge.
National	Reduces duplicated effort. Consistency between the 32 Local Authorities. Larger pool of available customers. Increased volumes would result in improved tariggs. Single infrastructure, centrally shared services. Economies of scale – lower costs would allow the Public Energy Company to be more competitive. More buying power. Scottish brand may be received positively. Risk averse Local Authorities may be mor elikely to participarte.	Lack of autonomy for Local Authorities and it would be difficult for the White Label to be flexible enough to meet the needs of 32 Local Authorities. This is coupled with a lack of uniderstanding of regional difficulties/specifities. Loss of local branding which some people may prefer to National/Scottish branding. Speed to market could be slower as it would be a larger project, hence more complex and time consuming to get agreed and set up.

Criteria to consider when choosing a White Label supplier:

• Customer service
• Alignment with local authority values
• Price

The top three above were considered the most significant.

• Provision of social obligations
• X% of energy delivered by renewables.
• Tariff solutions for local need/demand
• Ability to sell locally generated energy
• Sustainability
• Trustpilot rating
• Call waiting times
• Perception of White Label supplier
• Community fund
• Advocacy
• Low risk
• Carbon reduction
• Not for profit
• More responsible re carbon footprint
• Marketing ability (LA's have limited marketing budgets)
• Balance sheets (risk perspective, don't want them to fold)

4. How to move forward?

Some key barriers or challenges local authorities face moving forward are:

• A lack of resources (especially financial) – one delegate cited huge departmental and cross council cuts.
• A lack of commercial expertise and internal support.
• The challenge of negotiation for a White Label, and the challenges associated with interpreting procurement.
• Timescales – the time it will take to get ready for procurement.
• Marketing budgets are extremely tight (or non-existent)
• Some members will need to be convinced – they may perceive this to be a political risk. The Public Energy Company needs to be presented as an opportunity for members.
• Concerns surrounding legal fees.
• Unsure of where to assign resources on this project.

Support required/ suggestions made:

1. National coordination/ ALEO helps get over resource issue but needs to be big enough to service 32 LAs.

2. Delegates stressed the importance of involvement in the OBC process and opportunities to feed in and feed back to process.

3. Scottish Government talking to the chief executives/COSLA to make CEs more aware. Many delegates were concerned that the CEs, despite receiving the letter from Scottish Government, were unaware of the Public Energy Company plans.

4. Attendees stated they would like more information on how much this will cost Local Authorities. They felt that they couldn't fully support or back proposals without a knowledge of costs.

5. Scottish Government must commit to resourcing or signal the level of support they will be providing.

6. Attendees stressed that two specific areas they needed support in were legal and procurement.

7. Support may be required in the day to day coordination of the Public Energy Company.

8. A discussion needs to occur surrounding how the Public Energy Company will coordinate with other existing policies.

9. Local Authority representatives requested that they be provided with ring fenced marketing budgets to promote the Public Energy Company.

10. A further suggestion was that the local authorities need to share what they want and need and be more explicit about what they would and wouldn't accept in terms of the Public Energy Company.

11. Some delegates suggested that support from other local authorities was needed alongside the support from Scottish Government. Knowing what other local authorities are up to, sharing best practice, and having central data capture would all prove really useful in this respect.

Overall, there was a lack of consensus when it came to ascertaining what the local authority role in the Public Energy Company would be. Consequentially, the OBC needs to clarify this. Some delegates saw the role as predominantly promotion, getting people to sign up, voids, leases, and initial steering. Some anticipated that once the Public Energy Company was properly set up and had a customer base, they wouldn't play much of a role.

Most delegates believe that the role played by the local authorities will depend on the delivery model.

District heating and future generation of heat

"There is so much interest in renewables and energy generation in Scotland that to exclude it would miss the point and alienate local authorities."

• Attendees were largely supportive of utilising the Public Energy Company as an opportunity to explore district heating and the future generation of heat further and recognised that these considerations should form part of the OBC. Nevertheless, it was suggested that Scottish Government shouldn't 'walk before you run' and it is paramount that the OBC focuses on fuel poverty and energy efficiency in the first instance.
• With regards to district heat networks it was suggested that there should be a centralised pot of funding, and there is a need for the district heating energy company to coordinate with a public energy supplier. Some attendees posed the question as to whether or not the Public Energy Company can become the national body for district heat. At present, many believe that there is not enough incentive to developers from Scottish Government to pursue District Heat – remedying that could be part of the Public Energy Company's role.
• Another proposal made by attendees was the introduction of Local Feed in Tariffs (FiTs) to support the deployment of renewables. It was suggested that the Scottish Government attempt to replicate FiTs even if Westminster drop them/when they drop them.
• Further, it was suggested that PPAs could be set up with local generation projects in order to support them.
• In terms of building future generation of heat into the OBC, attendees recommending thinking about timescales for green energy production and considering how the length of White Label procurement will fit in with the growth of generation.

Miscellaneous considerations

• Has there been the opportunity for the Big 6 to comment on plans?
• How does the Public Energy Company fit in with SMETS2?
• How can proposals be tied in with housing more generally in terms of energy efficiency measures?
• Are there discussions with the NHS vis a vis benefits to health posed by fuel poverty reduction? Could certain tariffs be prescribed?

Attendee list:

Jamie Macleod, Scottish Government

Craig Doogan, Renfrewshire

Neil Ritchie, Scottish Government

Douglas Evans, Falkirk

Alan Clark, Scottish Government

Anne Ferguson, Stirling

Michael Berrington, Grant Thornton

Jim McAloon, West Dunbarton

Neil Peckett, Grant Thornton

Tom Maclennan, Aberdeen

James Higgins, Ecuity

Ann M Murray, Comhairle nan Eliean Siar

Alex Jones, Ecuity

Alan Paul, Fife

Ijaz Bashir, South Ayrshire

Lorna Pearce, Argyll and Bute

Andrew Brocket, North Ayrshire

Caroline Rodgers, East Lothian

Mark Cassidy, Perth and Kinross

Peter Rogers, West Lothian

Ian Doctor, Clackmannanshire

Duncan Smith, Renfrewshire

Roz Smith, Stirling

Lynda Stevenson, North Lanarkshire

Andrew Tweedie, East Renfrewshire

Stakeholder Event Two - 16^th January 2019

On 16^th January 2019, the OBC team (comprised of Ecuity, Grant Thornton and Cornwall Insight) and Scottish Government hosted a workshop event with a range of stakeholders from various sectors to discuss key issues associated with the development of an OBC for a Public Energy Company for Scotland.

The agenda for the event was as follows:

10:30 - Arrival, tea & coffee

Presentations (slides available - no minutes taken)

10:45 - Neil Ritchie, The Scottish Government

11:00 - Michael Berrington, Grant Thornton

11:15 - Ann McKenzie, The Scottish Government

13:30 – Adam Boorman, Cornwall Insight

Discussions (minutes below)

11:30 - Morning Discussions

• What do communities want, or need?
• Driving Innovation

13:00 - Lunch

13.45 - Afternoon Discussions

• White Label supply
• How to move forward?

15:00 - Next steps

1. Introductions

At the start of the event there was some discussion on the role of local authorities in the public energy company and potential candidates for the White Label supplier. Attendees were updated on local authority engagement including high level outcomes from the November local authority engagement event. Preferred terms for procuring a White Label supplier are in development through these engagement events as well as through further research. It was agreed there is scope to conduct further stakeholder engagement on this.

2. What do communities want, or need?

Set out below is a write up of attendee's views and ideas regarding the issues faced by communities/ consumers and the suggested ways in which these needs could be reflected in what the public energy company provides.

Trust

• People want to trust their Local Authorities but there are concerns that they lack expertise. It's worth noting that some local authorities have taken a long time to get moving on a public energy company for their cities.
• There are surveys that show that, typically, public services are more trusted in Scotland. Related to this, Robin Hood energy saved money at launch as publicity was free due to the association with the Local Authority.

Price

• Consumers care most about price. Second to this is security of supply. Robin Hood's cheapest bill is over £1,000. How are you going to compete with Octopus who are cheapest on the market? Scotland has the lowest switching rate across the UK. 8 of the 10 lowest parliamentary constituencies for switching are in Scotland.
• The challenge is whether they will be able to provide cheaper energy than the counterfactual. Provided people are switching from an SVT they will be making savings.
• It is not necessarily that the energy company has to be the lowest price, which is often set at an unsustainable level. Those who are paying high prices can still save significantly by switching to a more reasonably priced deal. It's partly about engaging with the least engaged people and serving those that are not served by the market currently. There is recognition that it is unlikely that the energy company will have very cheapest bills on the market.
• Important to ensure that Local Authorities don't lump cost (such as the cost of set up) onto bills. We should be talking about clients not customers, because what they need (as opposed to just energy supply) is healthy, warm, comfortable homes. It's not the failure of householders to engage with the market, but the failure of market to gain the trust of householders.
• Supplying energy is not a wonderful business to be in as margins are low, what really is the expectation about what a national company can do which couldn't already be done locally? Consumers want prices that are fairer over time and allow them to budget. Price stability at a reasonable level over time.
• Worth noting that the price cap does provide some price stability. However, the regulator is considering rising prices now. Nevertheless, paying for energy by direct debit provides budgeting stabilities.
• It's vital that we do not just look at price point – it's worth considering how a public energy company can help across all the drivers of fuel poverty. Longer term, how can it help communities generating energy. How can the Public Energy Company assist with innovative options for supplying energy and energy efficiency at the same time – warmth as a service for example?

Type of business (if a White Label Supply)

• One of the things a lot of communities want are socially conscious and environmental businesses. Different ownership models and community having a wider influence are of interest. Community purpose is desirable. In the highlands people pay a higher cost for their energy so this is something that needs to be considered.

Ecuity addition: Surplus in the highlands - the region pays the highest bills in GB because of a regional system for distribution costs. More on this can be found here.

• Many areas in Scotland have abundant renewable energy, the White Label Supplier should seek to capitalize on this. In addition, existing local energy projects should be integrated, where possible.

Customer service

• Customer service is very important. Citizens Advice deals with 30,000 energy issues a year in Scotland with issues around billing & metering. Most of the companies which have gone bust have terrible customer service records. If looking at tendering a White Label Supplier, you need to prioritize customer service.
• Good customer service – services that are available from a call centre or face to face interaction are particularly important for older people (it is important that the Public Energy Company or its White Label supplier is not an entirely digitalized customer service) New Scottish Social Security Agency perhaps provides a model there. In terms of the support for vulnerable customers, the Public Energy Company must ensure it provides, at the very least, the same level offered by existing suppliers such as Warm Home Discount. People would benefit from a 'one stop shop' where they can find out information on the Public Energy Company, get debt advice and health, and find out what initiatives they are eligible for.
• 68% of client journeys involve some form of face to face interactions – a large number of these involve demonstrations, such as central heating demonstrations. (so it's important this is provided by either the Public Energy Company or the White Label Supplier) Citizens Advice and Glasgow social housing do a more holistic way – drawing on this, we are calling for a National Energy Service.
• Decent levels of uptake are essential to delivering any of the objectives of the Public Energy Company, this links into the customer service point. In order for people to benefit, it has to be trusted and something people want to sign up to. Regarding this, the Public Energy Company must avoid the frequent assumption by politicians that government (or anything associated with the Government) will be trusted, as research shows governments are tarred/mistrusted in the energy sector as anyone else. Consequentially, there may be perception issues.
• Could the Public Energy Company provide a longer-term price guarantee to community energy generators? Or could there be the potential for aggregating demand for grid services to smaller players? Although, not sure how practical with a White Label agreement. Concerned that continuity of price may be under threat with the advent of smart meters and time of use tariffs - how could we ensure that time of use is wholly beneficial?
• The work that must go into acquiring customers is actually really challenging. Our power tried to raise additional funding but have been unable to repay a bond due to lack of growth in market. How will a Public Energy Company be able to grow the market?
• It was suggested that if the Public Energy Company really wants to tackle prices, they might need to consider owning the network. "Taking £100 off someone's bill won't solve fuel poverty."
• It's worth remembering that direct debit customers are not the most vulnerable, pay as you go (pre-payment meter) customers are. Ultimately, pay as you go customers shouldn't pay more. One proposal is that people who use lots could pay more (this could be in the form of rising block tariffs.) However, some attendees disagreed with rising block tariffs as these can punish those who, for whatever reason, must use more energy than others. For instance, the unemployed who are at home more, those with small children, those who are ill or disabled who may have to heat their homes to a higher temperature or may have specialist equipment with a high energy demand.
• We need to improve connectedness between local communities and local generation. Would it be possible to remove the Public Energy Company customers from network charges? Virtual local network project in Mull is a good idea – SSE Networks have made it available more widely. New generation can go onto constrained network if there is new demand.
• Public Energy Company should not be framed around retail supply but should be framed around supporting overall objectives of energy policy – for example decarbonisation. Public Energy Company will not be allowed to get away with a narrow scope, and Scottish Government need to be bold and mustn't define itself narrowly. Additionally, the Public Energy Company (and Scottish Government) shouldn't be afraid to spend public money on achieving public sector objectives.
• One attendee believed that the summary of community needs was a massive red flag as climate change mitigation versus fuel poverty is a huge policy issue (the two agendas are in conflict with one another and cannot be solved simultaneously) Believes Public Energy Company should decarbonise heat supply and should not aim to tackle fuel poverty.

Top five community needs

1. Low Price, but sustainability of price over time may be more important than absolute lowest in market

2. Customer service is high – not just being digital

3. Environmental objectives are being supported

4. Reservoir of expertise/catalyst role for the Public Energy Company with LAs and Communities

5. Support for fuel poor households.

3. An innovative energy company

Some innovative energy business models proposed to delegates were:

a) Energy as a Service,

Energy as a Service does away with charging customers for how much energy they use, focusing instead on how they use energy. Rather than paying for the number of kilowatt hours you consume, you will instead select a tariff such as 'Comfort' where you could pay a monthly subscription at a competitive fixed price rather than a cost per kilowatt hour. Just like mobile phone companies moved from charging for calls per minute or text to an overall monthly all-inclusive service offering, the same is possible for the energy sector.

b) The Subsided Tariff Model,

Certain customers would pay higher tariffs to subsidise fuel poor households, meaning they pay less.

c) Bespoke Tariffs,

This entails there being different tariffs for those that fall under different criteria.

d) Collective Switching,

Collective switching is where customers negotiate a group deal with a utility service such as gas or electricity. In this instance, this would mean groups/communities switching to the Public Energy Company as their provider en mass.

e) Aligning with EV roll out (energy storage),

The roll out of electric vehicles could provide the opportunity for 'mobile power storage.' Vehicle to grid technology would allow for energy stored in electric vehicles to be fed back into the national electricity network.

f) Smart Appliances,

Using smart meters and appliances to control energy usage.

g) Higher tariffs to help fund energy projects, and

This would involve tariffs being slightly higher but any profit being invested in local energy projects, especially those pertaining

h) A model focused entirely on local authority tenants.

Using local authorities as the gatekeeper, this model would mean that, at least initially, the Public Energy Company was pitched to local authority tenants solely.

The deliverability of various models was assessed using the deliverability matrix that we utilised at the Local Authority engagement event. Generally, there was not consensus on the usefulness of the matrix and there were concerns about using the findings quantitatively. Considering this, below are some comments from the matrix forms, and wider conversation surrounding the deliverability of various models and what innovative ideas the Public Energy Company could include. It is worth noting that attendees commented that these models are not mutually exclusive (many of them can be included in parallel within the Public Energy Company) Also, it was commented that the up costs for any of these models would be the same.

• Aligning with EV roll out
  • EV owners tend to be wealthy so this does not align with fuel poverty aims of Public Energy Company as those in fuel poverty are very unlikely to own electric vehicles.
  • This could encourage EV uptake.
  • There is not a clear strategy for rolling out EVs. The DNOs do not want people going off-grid. Not sure the Public Energy Company should be playing a role in it.
• Higher tariffs to help fund energy projects
  • If this causes wholesale price to come down, or results in a local supply tariff then the contribution to fuel poverty could be positive.
  • Depends on community solidarity and general willingness to pay.
• Bespoke tariff model
  • Could rely on an 'intelligent' consumer being able to accept the right tariff for them.
  • You could say when you get to 60 you can access a special tariff (bus pass tariff.)
  • The big challenge for the new company is to recruit customers. Having a range of tariffs may not be a bad thing.
• A model focused entirely on local authority tenants
  • Worth considering that there are lots of older people (who comprise a significant proportion of the fuel poor) living in the social rented sector.
  • Should include social housing as opposed to just local authority tenants.
  • Only 25% of those in fuel poverty are social housing tenants.
  • Too narrow.
  • Regarding the model focused on Local Authority tenants, we don't think that this is something that should be offered just to local authority tenants, but they could form a key part of a wider user base (?). There is a big issue of price instability so a model that provides longer term fixed tariff would be good across the board.
  • Vast proportion of older people are in owner occupied accommodation.
• Subsidized tariff model

Anything involving cross-subsidy depends on community solidarity – and a lower cost for some relies heavily on people (paying the higher end) signing up for it.

Subsidised tariff model has most impact on fuel poverty.

3. White Label Supply Criteria to consider when choosing a White Label supplier:

• Customer service (call centre as well as online) Good customer service needs to be balanced against cost sometimes
• Billing – legacy billings, flexible billing systems, modern, regular and accurate billing
• Reputation
• Energy source (percentage renewable)
• Sustainable business model
• Ethical
• Scottish
• Big six or not big six (are the big six too big, is a medium size supplier best? Must remember Government will face media interest re procurement – choices re big six and Scottish are potentially politically sensitive)
• Energy Company Obligation (ECO), Warm Homes Discount offering
• Treatment of those in debt (need to consider who is recovering debt, reputational risk for Scottish Government)
• Focus on addressing some Scottish specific issues. switching, Low Meter Coverage, Low sign up to Priority Services Register etc.

For White Label supply

Takes the risk away from Scottish government (SM)

Against White Label supply

What is the point in adding in more confusion? (KB)

What happens if the White Label supplier goes bust? Supplier of last resort kicks in and then your White Label kicks in? (KB)

Attendee list:

Jamie Macleod, Scottish Government

Jamie Stewart – Citizens Advice Scotland

Neil Ritchie, Scottish Government

Ragne Low – University of Strathclyde

Alan Clark, Scottish Government

Elizabeth Leighton – Leighton Consulting/Existing Homes Alliance

Ann McKenzie, Scottish Government

Matthew Crighton – Friends of the Earth Scotland

Michael Berrington, Grant Thornton

Jim Eadie, Age Scotland

Neil Peckett, Grant Thornton

Peter Spiers, Scottish Renewables

Adam Boorman, Cornwall Insight

Jon Clarke, Community Energy Scotland

James Higgins, Ecuity

Dr Keith Baker, Glasgow Caledonian University

Alex Jones, Ecuity

Simon Markall, Energy UK

Norman Kerr, OBE – Energy Action Scotland

Sarah Boyack, Scottish Federation of Housing Associations

Dr Johanna Carrie – Transition Edinburgh

Iain Wright, Common Weal