Meeting of the Parliament

Meeting date: Tuesday, January 29, 2019

Official Report 1161KB pdf

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Topical Question Time

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Our Power

To ask the Scottish Government what its response is to the not-for-profit energy supply company Our Power going out of business. (S5T-01462)

It is disappointing and sad that Our Power has had to cease trading. The Scottish Government has supported Our Power in its aim, since 2015, of tackling fuel poverty and supplying low-cost energy to households in Scotland. Our immediate response is focused on looking after the interests of the customers and staff of Our Power.

The independent regulator, Ofgem—the Office of Gas and Electricity Markets—is in the process of appointing a new supplier to take over Our Power’s customers. Customers are protected and no one will be cut off as a result of the change in supplier. Ofgem’s advice is for customers to take a current meter reading and wait to be transferred automatically to a new supplier. In due course, we will provide further support to Our Power customers as needed, for example through our home energy Scotland service.

This is a worrying time for Our Power’s employees in Edinburgh and we have offered support through partnership action for continuing employment. PACE aims to minimise the time that individuals who are affected by redundancy are out of work, and we are making that help available immediately. We will also work with Our Power’s partners to identify any further employment opportunities for those highly skilled and experienced staff.

Seventy people in Edinburgh fear for their jobs, and I welcome the cabinet secretary’s commitment to supporting them through PACE. Our Power’s plight is a shame for staff, customers and the prospect of healthier competition in the energy supply market. Backers included housing associations and the Government.

When were ministers first told about the company’s cash-flow problems? Did they seek any reassurances or look to intervene at that point? What is the total financial backing provided to Our Power by the Scottish Government? What was the balance of loans and grants and what are ministers’ expectations of recovering those?

Finally, can the cabinet secretary confirm where staff stand in relation to other creditors in the event of the company’s demise?

We were informed of Our Power’s collection difficulties, and the formal request was put into us on 21 December. As a foundation lender to Our Power, our relationship with it has been long standing and we have continued to be supportive in that relationship.

Alex Cole-Hamilton is right to mention the other lenders. This enterprise was designed to try to tackle fuel poverty and to do something different in this market. It should not be forgotten that the company provided low-cost energy largely to the social housing sector over three and a half years.

I absolutely understand that what has happened is a real worry for the staff and that this will be a worrying time for them. The 70 staff are mostly in the Craigmillar area of Edinburgh. I reiterate our offer of support through the PACE scheme to ensure that there is a speedy and effective response to their imminent plight.

I am happy to engage with Alex Cole-Hamilton on any other details forby our exchange today. We will continue to work with Our Power where we can provide support.

A £9.5 million loan has been provided to Our Power over the years. We have had a facilitative and constructive relationship with it over the years, based on the fact that we are the foundation lender.

Not for profit, tackling fuel poverty, being socially responsible and a fair deal for customers—that is what Our Power stood for. The Scottish Government wants the same principles to underpin its own new energy company.

The chairman of Our Power, Alister Steele, said:

“It is now generally accepted that it is unclear what the level of financial backing is required for a new entrant to cope with market volatility and regulatory change.”

In the past year, 11 small energy companies have ceased operating. What has the Scottish Government learned from that recent volatility in the market? Have its own plans for an energy company been altered at all? Has it shared learning with local authorities that are thinking about similar ventures? Has its outline business case been concluded? What guarantees are there that there will be a safe use of taxpayers’ money?

Alex Cole-Hamilton again raises legitimate and important points.

We give a commitment to take any learning that we can from the experience that we have gone through with Our Power. On the relationship between that experience and the creation of a public energy company, we will, of course, continue to develop proposals that will deliver the ambition of a public energy company, and we are on track to deliver that ambition by the end of this session of Parliament. My colleague Paul Wheelhouse has lead responsibility for that work, and he will take due cognisance of the points that Alex Cole-Hamilton has made.

We cannot wait for the United Kingdom or the market to deliver lower fuel prices for Scottish consumers. Our public energy company will support Scottish Government ambitions for energy consumers. It is about consumer confidence and choice. More than half of consumers remain on standard variable tariffs, which are the most expensive. The public energy company forms part of a solution, complementing the Scottish Government’s much wider work on energy consumers and fuel poverty. We will endeavour to ensure that any member with a concern as a result of what has happened is furnished with the facts and any developments on that.

I refer members to my renewable energy interests in the register of interests.

What existing similar loans are on the Government’s books? What assessment of them has been done for the coming financial year?

I think that the power industry is the only area in which we have committed to such an enterprise, but we can ensure that we get any information on that to Alexander Burnett.

From our perspective, the approach was a new attempt to find a way to give predominantly social tenants access to low-cost power. Our Power did so for three and a half years. I reiterate and underline how disappointing it is that, ultimately, the approach has not quite succeeded in this case. However, if there are any other such enterprises, we will ensure that Alexander Burnett is made aware of them.

That concludes topical question time. We have finished rather abruptly, so we will have a short suspension to allow members and ministers to change seats.

14:09 Meeting suspended.  

 

14:11 On resuming—