Robin Hood Energy

macman

nic_c said:

Biggus_Dickus said:

brewerdave said:

Wonder what the council tax payers in Nottingham think of £24m write off ??

I’d be livid;...it’s a lot of money for a local council.

According to those Twitter feed reports & Nottingham Post the good citizens of Nottingham face cumulative losses of £34.4m;  with potential liabilities  approaching £60m. ! 

Well many city councils have big right offs from Council Tax arrears, etc, so not sure how this is anymore outrageous.

Writing off uncollectable CT arrears is entirely different to ploughing public funds into an unsustainable business model that was always doomed to failure. LA's don't have any discretion over whether they should levy CT or not, it's a statutory obligation. But no one requires them to invest in or set up energy companies.

Biggus_Dickus

stewie_griffin said:

Unfortunately this comes on top with another fiasco with a local shopping centre that has also cost the council millions, but that's another story.

...oh dear,...it never rains but it pours.  :'( 

  

macman

I was looking at the link provided to theLECCY, which is the LIverpool based RHE white label operation. It mentions that the city council received £75K in bungs, sorry, 'new customer rewards', from RHE. I can't find anywhere that gives a current customer total for theLECCY, but a Google search does reveal that, 2 months after start up in April 2017, they had reached the magnificent total of ...111 customers on supply. 
If they maintained that rate of growth, they might have maybe 3,000 customers now? Which means that it cost RHE £25 to gain each customer. Assuming a 5% profit margin, say £50pa, they were handing back half their potential profit before they'd even started.

UnclaimedEnergy

Some referral fees from suppliers total £100 per new account.

£25 for each new customer acquisition (without any additional marketing costs etc.) is extremely cheap.

macman

Granted, but, if I understand the commercial arrangement correctly, the acquisition fees payable to the LA's hosting RHE white label operations are in addition to any referral fees payable to comparison sites and suchlike.
It's basically a franchising operation: RHE pays a fee per sign up to be allowed to promote itself as the 'community energy partner of the Mayor of Liverpool'. LCC and the other LA's involved don't actually have any customers or leads to pass to RHE.

The_Green_Hornet

Auditors Grant Thornton accused the council of  "institutional blindness" for continuing to prop it up.

https://www.bbc.co.uk/news/uk-england-nottinghamshire-54015033

Cardew

Since Gas and Electricty distribution was privatised nearly 30 years ago there have been scores of companies who tried and failed to prosper in this market.

Even large well known companies e.g. Virgin and Sainsburys couldn't establish themselves as rivals to the Big 6 and their customer base was taken over by one of the big 6 .

The simply fact is the profit margins per customer are small, even for the large companies with their huge buying power. Some of the cheaper tariffs are actually supplied at a loss, which is compensated for by the millions of customers who remain on the much more expensive 'Standard' tariffs.