Councils' energy firm nets £2.5million in profit
A council-backed energy services firm has reported an increase in profits for the past financial year despite a “volatile” period in global energy markets.
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West Mercia Energy, a purchasing consortium backed by four local authorities including Shropshire and Telford & Wrekin Councils, was created in 1989 and manages energy contracts for around 2,250 public sector organisations.
A report on the business’ annual accounts delivered to the joint committee of member authorities showed the firm recorded a net profit of £2.5million with annual turnover increasing by around 38 per cent to just over £186m.
A surplus of just over £2.4m will be distributed to member authorities in October, with Shropshire and Telford & Wrekin Council set to earn just over £600,000 each. The other members of the scheme, Herefordshire and Worcestershire councils are set to benefit from dividends of £551,000 and £603,000 respectively.
Treasurer James Walton told the meeting the firm was in good shape after recording improved results over the past two years.
“Overall we’ve seen a good position over the year and a return to significant profitability for the organisation,” he said.
“We’re seeing a healthy accounts position, a strong balance sheet and as has been reported through the year to members we’re seeing the organisation working to a high standard.”
The annual report to the joint committee said that despite price rises for customers in 2023/24, customer retention had been “excellent” and said the volatility of the energy market had led to contracts being signed with two new local authorities and a number of education academy trusts in an effort to reduce their energy costs.
“The net profit of £2.5m compares favourably against the budgeted level for the year and is above the prior year result of £2.4m. This is an excellent result for the business whilst at the same time providing competitive rates to our customers through the year,” the report said.
“As a result of this [difficult] market landscape, price rises seen for 23/24 were at a level much greater than previous years. This was exacerbated by the fact that our prices for the 22/23 financial year were, compared to the general market rates, extremely low.
“Whilst the price rises were much greater than our norm, pleasingly our commodity rates were 29 per cent below the average market rates and 54 per cent lower than the government support scheme for 23/24.”
