The sale of the council’s debt-ridden energy company is in the best interests of taxpayers, says Bristol deputy mayor Craig Cheney.
The decision to put the loss-making firm on the market was made behind closed doors at an exempt session of a cabinet meeting on Tuesday, but not before opposition councillors and members of the public raised concerns about how the matter had been handled.
Leader of the Conservative group Mark Weston, who tabled a failed motion on May 26 calling for an inquiry into Bristol Energy, described the situation as “a mess”
Mayor Marvin Rees has defended the decision to discuss the sale of the company behind closed doors because of its commercially sensitive nature, saying during Tuesday’s meeting that sharing information would come “at a huge additional cost to the city”.
The council has ploughed £36.5m into Bristol Energy with a total funding envelope of £37.7m approved. The firm, which was set up in 2015, has posted losses of £32.5m.
Speaking after Tuesday’s meeting, Rees said: “Establishing an energy company was always a high risk for the council and one which has brought continued challenges. The energy market is dominated by well-established far larger energy providers.
“Having inherited a failing company where £15m had already been spent or earmarked for spend, we were faced with a choice. We could have closed the company then or tried to develop a business strategy that would succeed, both in tackling fuel poverty in Bristol and delivering a financial return for the city. This proved to be impossible in such a volatile marketplace.
“We have tried to work in the best interests of the city and Bristol Energy customers but been unable to divulge the challenge we were tackling as this would have further disadvantaged us against competitors.”
Responding after the meeting, Weston blasted what he called the mayor’s “attempts to deny and deflect the main responsibility for this failure”.
The councillor for Henbury & Brentry said: “When the true history of this comes to be written, I suspect the mayor will be judged harshly over the wisdom of increasing the amount of corporate investment in this company.”
In early May, it was revealed the council commissioned accountancy firm Ernst & Young (EY) to carry out a “full assessment of the company’s structure and future business viability” at a cost of £165,000 (+VAT).
Cabinet members reviewed the recommendations during the exempt session on Tuesday and came to the decision selling the company now would prevent any further investment beyond that already agreed. A buyer will now be sought.
The local democracy serviced has reported changing market conditions and the coronavirus pandemic are expected to wipe an estimated £6m-£7m off the value of the council’s investment in Bristol Energy, according to its latest set of accounts.
Deputy mayor Craig Cheney, the cabinet member for finance, said the council had “worked tirelessly to try and turn the company into something that could be profitable and bring social benefit.
He concluded on Tuesday: “Selling Bristol Energy is in the best interests for the council and city taxpayers.”
Main photo by Martin Booth
Additional reporting by Amanda Cameron, a local democracy reporter for Bristol