Forum topic: The sale of Energetik is the wrong move for the borough

My name is Shakira Ortiz, and I’m the Vice Chair of the Meridian Water Homeowners Association, a residents' association that was created to amplify the voices of the development’s residents who have managed to fall through the cracks when it comes to local issues, especially when the issues are communal and shared with our council tenant neighbours.

A lot of the time when the topic of Meridian Water comes up, it is seen as a vague, abstract concept as opposed to a neighbourhood where regular people are trying to raise families, and it is sad that the perception of what this development was supposed to be has been overshadowed by the failings of what was supposed to be a mega-council project with the objective of providing more affordable homes. Within this, a lot of council projects have been piloted and launched in the development, the most well-known project being the launch of the council-owned energy company energetik.

Energetik, a company set up by the council in 2011 was ‘set up to supply heat and hot water to over 15,000 homes and businesses across North London’.

Heating is supplied through four heat networks consisting of energy centres connected to insulated pipes that transport heat to homes and businesses in Enfield. These networks use different heat sources, including waste heat from the North London Heat and Power Project. This way of supplying energy is supposed to be ‘better value energy, which is efficient, reliable and environmentally friendly’.

All the research on this concludes that this is true, and while there are cons to this kind of energy supply, the main being that there is no freedom of choice for residents to choose their energy supplier. The pros however do outweigh the cons, especially when it’s to do with reaching net zero targets as well as making homes safer- as there is no need for each housing unit on this network to have an individual boiler.

The heat network has also been expanded, providing energy to households in Arnos Grove, Oakwood, and Ponders End.

On the 24th of June, the new minority Conservative administration reviewed the financial health of Energetik as a council asset and decided it would be in the council’s interest to sell Energetik and keep a golden share, as shown in point 7 of the cabinet meeting proposal:

‘The preferred option is a full sale of Energetik to a strategic partner, supported by a Golden Share for the Council. This would secure the investment, market expertise and delivery capacity needed for growth, while providing a clearer and more investable structure than a partial sale. The Golden Share would protect the Council’s key interests, including affordability, decarbonisation, service quality and long-term stewardship.’

A golden share refers to special rights retained by a government with respect to a newly privated company or other government entity. These rights may take the form of a special statutory provision or the issuance of a single share in the company. Governments usually want a golden share to maintain some control over the company's activities for a certain period following the privatization of a former public company for political or other reasons.

What does this mean for residents?

• If this deal is to take place the way the council describes the residents on this energy network at least have the assurance that local government will have their golden share and will be able to oversee that the supplier this company has been sold to is doing. However, there is no insight into how long this will be for, and what kind of oversight local council will have.
• Any company wanting to buy Energetik will want the least amount of oversight possible, which means the council will have to play on their terms. As stated in practical law:
• Many jurisdictions prohibit the use of golden shares because they restrict the free flow of capital.’
• Any private companies’ final objective is to secure as much profits as possible – and they have no obligation to customers as a council-owned company would have. This could lead to major price hikes on residents, many of them in affordable housing, and this could lead to customers not being able to pay such high bills.
• Council owned companies also make sure to invest in maintenance of their assets, as they have a duty to do this for residents, whereas a private company has no obligation to do so, only to make as much money as possible for shareholders. This means that further down the line, there could be an instance of maintenance investment being more expensive than just keeping the system running, which could lead to major issues on a shred heat network.
• Could this be a Thames Water 2.0 waiting to happen? Will the residents on this network, now all over Enfield be given an insight into this proposed deal? As we have no choice as to who our energy supplier is, this can greatly affect our bills, especially for those in affordable housing. My worry is that in an effort to cut costs, this administration is putting ‘growth’ before the needs of residents and completely ignoring the precarious position this puts us in.