Some examples in Europe show that cities running their own energy company can lower the energy bill for citizens

Across Europe, town and city councils are becoming increasingly interested in energy decentralisation, i.e. in producing power closer to where it is consumed.

Those municipalities that have already experienced this say the model is one of the best ways of fighting pollution and reducing energy costs for citizens. Heidelberg is one such city in Germany, with its long-running energy company.

The city-owned company is responsible for managing gas, heating, and the water and sewage systems. “The most important issue was that we started our action plan with all the population behind us”, states mayor Eckart Würzner. “We have a general strategy to be a city free of fossil fuels by 2050. This is extremely challenging since we are a growing city and therefore we have to switch to renewables in very little time,” he points out.

The Municipalityhas developed a new urban area, Bahnstadt, that is 100 % CO2 free. “The buildings are very energy efficient and the resources used to serve this area are 100 % renewable. We have noticed that the energy demand of the flats’ owners has fallen dramatically,” adds the mayor of Heidelberg. All the buildings in Bahnstadt are constructed to ‘passive house’ standards. This construction concept allows the inhabitants to cut their energy consumption for heating by 80% compared to normal houses.

Energy is generally inexpensive in Sweden since there is a long tradition of cities supplying citizens with affordable home-grown power. In addition, prices are kept low by the large choice of energy companies – around 300 – on the market today.

Växjö is no exception and governs its energy policy and resources independently. “We own our biomass plant, where we produce electricity, heating and cooling, and for 20 years we have been using only bio-energy. Actually the entire city is heated with bio-energy”, says mayor Bo Frank.

He adds that the city also owns facilities for biogas production. “Each citizen is more or less required to put all organic waste in a separate container. We use that organic waste to produce biogas for all public transport”, explains Frank. The city promotes public transport to limit the number of cars in the city centre. “We encourage people and companies to buy electric cars. All cars owned by the Municipality are environmentally-friendly”, states Frank.

In France, the city of Grenoble has been able to gain the trust of its citizens thanks to its 100 year-old energy company. Private businesses sell electricity to under 20% of the population.

“Private stakeholders are only interested in the financial aspect, whereas local energy suppliers also take into account the social, environmental and spatial dimensions of cities”, says deputy mayor Vincent Fristot. He adds that the Municipality can offer specific support to people who are unable to pay their electricity bills. It involves allowing citizens to pay in instalments or to fit home devices with low-power consumption.

Besides the social benefits granted to citizens, the local energy supplier in Grenoble has invested in renewable facilities, such as wind turbines and photovoltaic panels. “It was very important for us to be able to supply green energy at the best possible price, which can compete with private energy companies”, emphasises Fristot.

Cat Hobbs, director of We Own It, a British campaigning organisation, located in Oxford, agree on this approach: “It is difficult to have control over energy policy when the company is private. They do what they like; therefore, for those who want to produce renewable energy, it would be much easier to set up new companies, with public ownership”.

More and more communities in Europe are pondering a return to public management of power and of other important assets such as water. The new trend is known as remunicipalisation.

In other words, energy back in local hands.

Source: Fliuch.org

Article by by Michael Brennan, Sunday Business Post, August 23, 2015

Consumers and businesses are facing hikes in electricity charges at a time when the operators of the network are getting bonuses of up to 15 per cent.

The two companies responsible for the country’s electricity network are in line for spending increases of €1.8 billion over the next five years, bringing their total budgets to €5.2 billion.

This will increase the average electricity bill for a family by at least 5 per cent over the next five years. Businesses can expect similar increases in their electricity costs.

A significant proportion of the increases in network charges will go to fund new power lines being planned by the state-owned grid operator Eirgrid. Some €500 million, meanwhile, will be used to fund the rollout of smart electricity meters to two million households by ESB Networks, which maintains the network.

However, a report prepared for the Commission for Energy Regulation by consultants has criticised the bonus payments made to staff at Eirgrid. The consultants, Jacobs, found that Eirgrid had consistently paid bonuses of up to 15 per cent to its staff during the economic recession over the past five years.

The report said that it would have expected the payments to vary with “some achieving their targets and others failing”. But Eirgrid did not give any precise details of what the staff had done to earn this “performance-related pay”, and the report found that only 14 per cent of the biggest electricity projects were delivered on time over the past five years.

The Jacobs report states that between €6 million and €7 million of the money Eirgrid has paid out in bonuses was “inefficient”, and that their cost should not be passed on to electricity customers.

It showed that the highest individual bonus payments were to Eirgrid managers, who got 15.4 per cent in 2012. These managers are getting slightly lower performance-related payments of 14.1 per cent this year. There are also performance related payments for Eirgrid professionals (13.2 per cent), directors (10.2 per cent), and those in graduate or support grades(12.6 per cent). The average bonus payment this year is 13.1 per cent.

Eirgrid has applied to the regulator to continue paying bonus payments of up to 15 per cent to staff for the next five years. It said it did not make the payments to all staff, and that it was keeping all aspects of its business under review, including staff wages, “to ensure they are competitive and in line with market rates”.

The energy regulator is proposing annual increases in the two main electricity charges which fund Eirgrid and ESB Networks. Electricity distribution charges are paid to ESB Networks and account for 25 per cent of customers’ bills.

The proposed rises of 1.9 per cent per year up to 2020 are on top of inflation. Economist Stephen Kinsella has calculated that this equates to an 18 per cent increase in distribution charges over the next five years. He said this alone will increase the average electricity bill by almost 5 per cent over the period.

“Oil prices are collapsing and commodity prices are in the toilet. But the operators are hoovering up a bigger increase in the recovery for themselves,” he said.

The Commission for Energy Regulation has also proposed that the electricity transmission charges, which are paid to Eirgrid, will rise by 2.5 per cent per year up to 2020.

These charges have a smaller impact on households because they only account for 5 per cent of customers bills. The regulator has not released any figures on what the overall rise in electricity charges would cost consumers over the next five years.

A spokesman said the proposed impact this year would be a 1 per cent rise in electricity bills – which would add around €10 to an annual household bill.

“The actual outcome for customer prices depends, among other factors, on international fuel and related generation costs, which are currently circa 50 per cent of the overall cost of electricity to customers,” he said.

Eirgrid’s staffing costs went €16 million over budget over the past five years, with its 278 staff now paid an average salary of €97,000 each. It argued that it was using a “holistic approach” by increasing staff numbers and reducing the hiring of outside contractors.

It has to work with ESB Networks, which has 3,145 staff, to maintain the electricity network. They get an average salary of €80,000 and bonuses of up to 8 per cent. But the Jacobs report said there were signs that targets were “sufficiently robust”.

ESB Networks failed to deliver €10 million of efficiency savings that it had promised and is consistently missing its targets for maintaining the electricity network. The consultants said this consistent underperformance may lead to “an ongoing degradation of the health of the assets”.

ESB Networks said it was inappropriate to comment because the public consultation on the electricity charges was still ongoing. “We will participate in that consultation and look forward to conclusion of the process,” a spokesman said.