Agenda item

To receive a report from the Executive Director of Regeneration and Environment seeking approval to the Council’s main investment decision in Energetik.                                                                       (Report No: 175)

(Key Decision Reference Numbers: 4266 and 4035)

Please also note the report on the Part 2 Agenda (Report No: 180).

Please note that this report is due to be considered at Cabinet on 18 January 2017 after the Council agenda is published.  Any changes made to the report at Cabinet will be reported to Council on the Council update sheet, tabled at the meeting. 

Councillor Sitkin moved and Councillor Fonyonga seconded the report of the Executive Director Regeneration and Environment seeking approval for the Council’s main investment decision in energetik.  (Report No: 175)

NOTED

1.               This report was considered in conjunction with report No 180 on the part 2 agenda. 

2.               The view of the majority group that was a fantastic initiative which had widespread support: the entrepreneurial leadership in bringing this forward was saluted. 

3.               The proposal was for a high specification, high quality, sustainable, high social value, piece of infrastructure which had been professionally appraised by an independent board and KPMG.  Significant work had been done to mitigate and manage any risks and to ensure that the business would operate on a solid footing.  More financial detail was provided in the part 2 section of the meeting. 

4.               Members were informed that the project would bring significant economic, social, environmental and public health benefits, reducing air pollution by moving to low carbon.  It would also reduce health inequalities, reducing the cost of energy and resulting fuel poverty which would be particularly beneficial to those on low incomes.  Consequences also included alleviating respiratory diseases and improving mental health.  The security of supply must be a benefit.

5.               The business assumptions behind the scheme had been very conservative and the associated risks had been evaluated by an independent board and KPMG.  The project had the support of the GLA and was consistent with Government policy.

6.               The priority of the Council was to reduce the cost of housing, rent and sale prices with clean green and affordable energy.  Residents of Montmorency Park, formerly the Ladderswood Estate, would be the first customers to benefit from the scheme which would also cover Meridian Water, the Alma Estate and the Ponders End Electric Quarter. 

7.               The concerns of the Opposition Group that there be an acknowledgement that district heating systems, although reducing greenhouse gasses, did have downsides and risks. 

·       Many existing schemes had poor customer service records.  District heat networks were monopoly suppliers and heating costs could be uncompetitive.  If things went wrong energy could become more and more expensive.  If the back-up gas fired boiler had to be used, the promised reduction in greenhouse gasses would not be achieved.  High technical standards would increase costs and may not resolve anticipated problems or prevent heat loss.  If the system broke down, hundreds would be affected.  The customer would end up paying any increased costs. 

·       A recent “Which” report had been critical of district heating systems because of widespread customer dissatisfaction, system breakdowns, high charges - some were paying more that 25% more than those on standard gas tariffs.  Customer complaint handling was also poor. 

·       It was important to ensure fair service level agreements and transparent prices.  

8.               In summing up, Councillor Sitkin said that some of the risks mentioned by the Opposition had arisen as a result of poor construction which would not apply in this case.  Energetik would be treating their customers well and customers would have the option of complaining to the Customer Complaints Ombudsman if they were not happy. 

Following the discussion, the recommendations in the report were put to the vote and agreed with the following result:

For:  36

Against:  17

Abstentions: 0

AGREED to note the recommendations which had been agreed by Cabinet at its meeting on 18 January 2017. 

Councillor Achilleas Georgiou declared a disclosable pecuniary interest in this item, left the meeting when the item was discussed and did not vote. 

Councillors Alan Sitkin, Doug Taylor and Ahmet Oykener declared non pecuniary interests in relation to item 10 and 20 as Councillor Sitkin was the chair and the others were members of the energetik board.  They remained in the meeting during discussion of the item and were able to vote.