A report from the Director of Regeneration and Environment is attached. This seeks a number of approvals on the mobilisation and operation of Lee Valley Heat Network (LVHN). (Report No.16, agenda part two also refers) (Key decision – reference number 4080)
(8.50 – 8.55 pm)
Councillor Alan Sitkin (Cabinet Member for Economic Regeneration and Business Development) introduced the report of the Director of Regeneration and Environment (No.11) regarding the mobilisation and operation of the Lee Valley Heat Network (LVHN).
1. That Report No.16 also referred as detailed in Minute No.24 below.
2. The funding requirements and timescales involved as set out in detail in the report and drawn to Members’ attention by Councillor Sitkin.
3. The detailed recommendations set out in section 2 of the report and reflected in the decisions below.
4. That appendix 1 to the report set out the proposed governance structure; option C was being recommended as the preferred structure.
Alternative Options Considered: NOTED the following alternative options which had been considered as set out in section 4 of the report:
· Do nothing: this would lose the significant economic, environmental and social benefits forecast to be delivered by LVHN.
· Not to change the Articles of Association for HoldCo: now that the LVHN project was fully developed, it was appropriate to update the Articles to reflect the matters dealt with in this report, and to generally ensure they were up to date and fit for purpose.
· Not to provide the funding to mobilise LVHN Ltd and to enable it to operate for the first year.
· Options A, B and C: options A and B were discounted for the reasons explained in Appendix 1 of the report.
DECISION: The Cabinet agreed to
1. Confirm LVHN Ltd. As the Holding Company (HoldCo) (and of which Enfield was the sole shareholder) and approve the setting up of a wholly owned subsidiary company (OpCo) to undertake project delivery, as the method of governance and delivery for the LVHN business.
2. Approve the amended Articles of Association (including establishment of an Audit Committee) for HoldCo (as detailed in appendix 3 of the report) and to authorise that these be adopted as the revised Articles for the existing Council owned company (LVHN Ltd).
3. Approve the delegation arrangements described in section 3.7.15 of the report.
4. Approve the procurement of insurance to indemnify Council officers and Members acting as directors under the Local Authorities (Indemnities for Members and Officers) Order 2004.
5. Approve the drawdown of a total of £2.143 million from the Council’s indicative capital programme consisting of:
· £1.096 million forecast costs for the six months from September 2015 to March 2016.
· £1.047 million forecast operational costs for the six months from April 2016 to September 2016, the drawdown of which would need to be specifically authorised by both the Director of Regeneration and Environment, and the Director of Finance, Resources and Customer Services.
This would increase the Council’s project investment to £4.256 million to September 2016, as detailed in Table 1 (set out in Report No.16, Minute No.24 below refers).
6. Approve the estimated £170k revenue cost related to borrowing an additional £2.143m, to cover interest payments and repayment of principal, with the remaining investment coming from existing budgets.
7. Recommend to full Council that the £2.143m project development costs be added to the Council’s approved capital programme.
8. Approve the principle of the On-Lending Agreement, to enable LVHN Ltd. to operate at the level envisaged in the Business Plan, and a working capital facility of up to £0.5million to cover operating expenditure within the Business Plan but not covered by the On-Lending Agreement.
9. That following evaluation of the tenders and appointment of preferred bidders, the Council authorises HoldCo to enter into contract with:
· The Design, Build and Operate contractor to commence necessary design work for the Strategic Heat Network and District Heating Energy Centre, to enable submission of the associated planning application by June 2016.
· The Operations and Maintenance contractors for the Satellite Schemes, including an interim arrangement for the satellite scheme at Ladderswood until build out was complete.
· The Customer Services contractor, initially for Ladderswood and as required for further stages of the project.
10. Authorise the Director of Regeneration and Environment to agree the entering into by the Council of any necessary ancillary agreements required to give effect to these contracts.
RECOMMENDED TO COUNCIL that the £2.143m project development costs be added to the Council’s approved capital programme.
Reason: Enfield Council and the GLA had already invested significant resource and revenue funding to develop the LVHN Business Plan. The European Investment Bank had since demonstrated external investor confidence in the scheme. Without Enfield Council’s continued investment to mobilise LVHN Ltd. and make it operational for its first full year, it is not possible to develop the Strategic Heat Network and Satellite Schemes in Phase 1. They are critical to catalysing the heat network and subsequently delivering the significant economic, environmental and social benefits forecast for this city-scale heat network.
(Key decision – reference number 4080)