To receive a report from the Director of Commercial seeking a second tranche of funding to deliver the remainder of the Energetik business plan.
(Report No: 74) (Key Decision Reference Number: KD: 4642)
This report should be considered in conjunction with Report No: 78 on the part 2 agenda.
This report is due to be considered at Cabinet on 11 September 2019 after this agenda has been published. The Cabinet decision on recommendation will be reported to Council on the green update sheet tabled at the meeting.
Councillor Maguire moved and Councillor Caliskan seconded the report of the Director of Commercial seeking a second tranche of funding to deliver the remainder of the Energetik Business Plan. (Report Nos: 74 and 78).
Councillor Ergin Erbil moved and Councillor Laban seconded a resolution to exclude the press and public so that the part 1 and part 2 reports could be discussed at the same time.
RESOLVED, in accordance with Section 100(A) of the Local Government Act 1972 to exclude the press and public from the meeting for the item of business listed on part two of the agenda on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 3 (information relating to the financial or business affairs of any particular person (including the authority holding that information) of Part 1 of Schedule 12A to the Act (as amended by the Local Government (Access to Information) (Variation) Order 2006).
All press and public left the meeting at this point.
1. Cabinet had considered this report at their meeting on 17 July 2019 and agreed to recommend that Council approve the additional funding.
2. Councillor Maguire introduced the report highlighting:
· Energetik had been set up to provide a cheaper reliable form of renewable energy for new developments. An initial sum of £15 had been invested. So far four networks have been created.
· It helps the Council tackle the climate change emergency reducing the borough’s carbon footprint, provides improvements to air quality and health and helps alleviate fuel poverty.
· A supply agreement with the North London Waste Authority was due to be signed by the end of the month.
3. The concerns of the Opposition Group with regards to:
· The effectiveness of district heating systems in helping the environment.
· The administration costs and customer resistance.
· The difficulties in delivering the second part of the project.
· The amount of money involved. Although provided by grants and loans, if the company were wound up, the Council would have to pay these back.
· Risks that the system would break down or that the Meridian Water and other developers may not sign up to the scheme.
· That the project was too ambitious and too much of a financial risk.
· That the scheme could cause poor air quality.
· That agreements were not fully signed up.
4. The comments of the Majority Group:
· The report had been agreed by Cabinet the preceding week for the second tranche of funding to deliver the remainder of its business plan including the hearing infrastructure required to serve Meridian Water.
· In October 2018 Cabinet had asked Energetik to review the alternative funding sources and to develop a more customer focussed approach and to focus on alleviating fuel poverty and helping the Council tackle the climate change emergency.
5. Councillor Maguire summed up by saying that due diligence had been carried out, the project would be investing in fuel poverty, and needs this next tranche of money to move forward. The Council had been very cautious in their approach to the project.
Following the debate, the recommendations in the report were put to the vote and agreed with the following result:
Councillor Neville voted against the recommendations.
1. To approve a further investment of £30m to fund phase 2a of Energetik business plan up to 2024 which is contingent on the Council securing HNIP and MEEF funding as set out in table in 3.50. For the avoidance of doubt, the execution of the Heat Supply Agreement with the NLWA is a condition precedent on the Council releasing the approved funding being sought – see 3.4.4.
2. To note that Cabinet is due to agree on the 11 September 2019 that should the Council not be able to demonstrate the need for HNIP gap funding by January 2020 as set out in the table at 3.50, the decision on an updated investment strategy will be brought back to Cabinet.
3. To approve the forecast £7.25m allocation to be added to the Council’s ‘Projects in the pipeline’. Addition to the approved programme will require relevant Council and Cabinet approval. Tranche 2b is the remaining investment required to deliver the full Energetik business case on the current assumptions and timelines.
4. To note that Cabinet is due to approve on 11 September 2019 the revisions to the company’s 40-year Business Plan as outlined within the company’s Business Plan Addendum and the revised financial projections as identified within paragraphs 3.47 to 3.49 of this report.
5. To note that Cabinet is due to approve on 11 September 2019 the delegation to the Executive Director, Resources (in consultation with the Director of Commercial) to agree and approve any items arising out of the due diligence exercise being conducted by KPMG, and from the legal and financial state aid advice.
6. To note that Cabinet is due to approve on 11 September 2019 that the Executive Director, Resources (in consultation with the Director of Commercial) is to work with the company to agree and execute an on-lending agreement to cover Tranche 2 expenditure and to implement any arrangement involving equity by the Council. As per paragraph 3.33, this is 3% or 2.13% above the blended rate, whichever is higher.
7. To note that Cabinet is due to approve in principle on 11 September 2019, subject to investment being secured from HNIP, the ring-fencing of an amount of the received interest payments from Energetik, to be used on Enfield fuel poverty projects, to be reviewed annually, noting that a further paper will be required in due course detailing the intervention options available.
The press and public returned to the meeting.