Sutton Council’s devoted support for Viridor’s Beddington Lane incinerator is seeing them trying to flog heating to a Barratt’s housing development at Hackbridge at three times the current market price.
Report by WALTER CRONXITE
Cheap, almost cost-free energy to heat your home, all from burning a load of old rubbish. What’s not to like? Well, when it comes to the project Sutton Council has attempted to foist on local people as a way of making the notion of the polluting Viridor incinerator at Beddington Lane more “acceptable”, quite a lot actually.
Especially because Sutton’s “cheap energy” that it wants to force on to Barratt’s Felnex development at Hackbridge turns out to be a big fat lie.Sutton Council was determined to make a business case for using the heat generated from the incinerator and has ploughed on, trying hard to ignore the fact that falling global energy prices have rendered its business plan unsustainable.
The scheme is now degenerating into a circus of calamity and incompetence, threatening to leave Sutton Council Tax-payers picking up the bill for decades to come, while the people of Croydon and other nearby areas could be paying with their health as a consequence of allowing incineration on their door step.
Leaked Sutton Council documents reveal that its business plan was based on charging 14.1p per kWH. The current market cost for gas is less than 5p per kWH.
Critics believe this disparity in fuel costs makes Sutton’s whole scheme financially unviable.
Sutton’s determination to create the district heat network in Hackbridge arose because the heat from waste feature of the incinerator – or, as the Liberal Democrat-run council and their partners Viridor would prefer you to cal it, the “Energy Recovery Facility” – was crucial to justify the planning permission which they granted under controversial circumstances in 2013.
Indeed, the former Sutton councillor John Drage has admitted this important fact. It’s just a shame that Drage never admitted that he was also a lifelong mate of Viridor CEO Colin Drummond when he was on the contract-awarding South London Waste Partnership.
Drage stated at a Sutton Development Control Committee meeting in May 2013 that the incinerator’s required Carbon Intensity Floor level would only be achieved if the heat network is utilised. Without it, the application would fail. He also said that more work was needed to make the heat network a reality.
And that’s where Sutton Council stepped in to help their chums at Viridor.To save the incinerator, Sutton Council created the heat network concept, which it said would provide cheap heating also for some homes in Croydon and Merton. To market the idea, and the heating, it established a company called Opportunity Sutton Ltd. Sutton Living Ltd was one proposed subsidiary intended to take advantage of property development in the borough, while Sutton Decentralised Energy Network Ltd – or SDEN for short – was to be created to install and manage the district heat network.
At the glitzy launch of the Sutton Decentralised Energy Network in November 2015, Sutton Council produced a glossy brochure extolling the virtues of SDEN Ltd. Councillor Jane McCoy confirmed that Barratt Homes’ Felnex development in Hackbridge would be the heat network’s first customer.
“Around 725 homes in the new Felnex development will be the first to benefit from our local energy network,” McCoy said. She spoke of ambitious plans to expand the network “across the borough and beyond” to 19,000 homes.
But there was a problem with all this. Much of it is untrue, an as-yet unfulfilled fantasy of Sutton Council.
At the time of that launch, neither company actually existed. Sutton Living Ltd was not incorporated until December 1, 2015, and Sutton Decentralised Energy Network Ltd was only registered this week, on February 23, 2016.Possibly even more importantly, neither Viridor, as a supplier, nor Barratt Homes as a customer, have actually signed any agreement for the provision of heat, despite McCoy’s claims four months ago.
And according to sources close to the discussions in Sutton, the longer the matter drags on, the more uncomfortable are Barratt’s at signing up for this over-priced heating scheme.
At the meeting of Sutton Council’s Opportunity Sutton sub-committee last Monday, February 22, the discussion was about Sutton Decentralised Energy Network Ltd’s business plan and progress.
At the meeting, the management team conceded that contracts would probably not be completed until the end of March at the earliest, and may possibly take until at least June this year.
McCoy, who is chair of Sutton’s housing, economy and business committee, expressed her surprise that the company she had lauded at a public launch four months earlier had not actually yet been incorporated. Referring to the name SDEN Ltd, she said: “With the delay in registering the company, is there any threat to us retaining the name? That’s quite important.”
Imagine the senior councillor’s dismay when she was told that the company name SDEN Ltd could not be used by Sutton Council, because a company with this name had existed since 2011. Some might think that McCoy and Sutton Council launching a scheme and announcing a company, using a name that was already in use by another business and failing to conduct due diligence over corporate registration might be regarded as incompetent.It is also very poor value for money for Sutton’s rate-payers.
Simon Woodward is an external consultant hired in as Sutton Decentralised Energy Network Ltd’s managing director, at a cost of more than £83,000 so far. From April to December 2015 his company, Woodward Energy Consulting Ltd, billed the council £58,922 – for just two days’ work a week, according to Sutton’s own business plan.
Woodward is a former director of companies in the Engie group (formerly GDF Suez), including Cofely District Energy Ltd. He is also a founder and director of the UK District Energy Association (UKDEA), one of two prominent industry associations.
Concerns have been raised that as the chairman and technical director of the industry association, he may have a conflict of interest as the MD of a company procuring services possibly from his members.
Interestingly, Sutton Council has signed up as a member of the UKDEA – Woodward’s association – but has not joined the rival organisation, the Association for Decentralised Energy (ADE). Odd that.Another subject under discussion at the Opportunity Sutton Ltd sub-committee was the website. The business plan states that the website will be key to establishing the SDEN brand.
“SDEN will develop a dedicated customer centric website for the company,” it says. “This will be used to clearly distinguish the SDEN brand and convey the mission statement…” ahh, bless, they have a mission statement, “…and proposals for scheme.”
We’re not sure whether McCoy knows this yet, but there’s another embarrassment waiting for Woodward and Sutton Council. Unlike their smart colleagues at Sutton Living Ltd, Woodward and his team didn’t think to register the web address for sden.co.uk.
Inside Croydon has discovered that the Beddington North councillor Nick Mattey – the man who was expelled from the Liberal Democrats Party for whistle-blowing on the whole Viridor deal – has bought the domain name and smartly used it to trash the whole basis of Sutton’s plan.
What you might call the real McCoy.
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I was pleased to see that Nick Mattey is on the ball, unlike Councillor McCoy.
Could I ask if, when the business plan was presented for Sutton Council’s consideration, the viability assessment for the District Heating Network indicated a level of KWH cost, below which viability of said scheme could not be achieved and therefore not proceeded with?
Put another way, how much did the cost have to fall and were Sutton Council aware of that figure, which seems not to have been released to the residents, much less to Barrett Homes,….Commercial – in- Confidence perhaps?
Willful misleading comes to mind!
I know the answer to your question, because I am a councillor in Sutton. I am on the Housing, Economy, and Business Committee that originally looked at the energy network business case, and also the (sole) opposition councillor on the sub-committee that now monitors its ongoing progress.
However, even though I know the answer to your question (and I think it’s a fair question), I am not allowed to tell you. That’s because all the interesting and important details about this scheme have been ruled confidential on the grounds of commercial sensitivity. I brought this up at the last sub-committee meeting, i asked when will the public be allowed to see the figures so they can judge the whether this is a good plan? I was told, effectively, that it can’t ever be released because it’s too commercially sensitive. So there. Even though it’s public money bankrolling it all.
I think this is a bad plan driven more by politics than business logic, and I voted against it at every opportunity. I think it manages to be both a bad deal for the people ultimately buying the energy, while also looking like a poor deal for the taxpayer funding it, which is quite impressively bad when you think about it! But I am barred from giving you the numbers to demonstrate why, and of course Sutton Council’s press office will be happy to tell you how brilliant it is.
I’m glad that Councillor Garratt takes his obligations seriously. It would be highly reprehensible if these hidden facts were leaked to a hostile press, who might then embarrass Sutton LibDems, weeks before an important election.
The picture of the Minutes of the Sutton Development Control Committee make sickening reading.
On the energy from waste concept, it has taken the owners of the Deptford “SELCHP” incinerator some 25 years before the much-vaunted “heat for free” has at last started to be used to heat some estates within a mile of the plant.
Looking at the whole South Waste London Waste Partnership, one has to wonder how bad a project has to be before its collar is felt by the Law?
Thanks Neil for your observations on ‘integrity’. I wonder if, among the readers of these articles there are those familiar with Company Law, the limitations of ‘Commercial in confidence’ clauses and their application to the apparently deceitful behaviour of Viridor and some of the present and former members of the current Sutton Council. Do such readers have a view on what is set out below?
Is there, in Company Law, or even common law, a statute or statutes that state it to be unlawful for a Company, singly or in collusion, with another body, to misrepresent or suppress information important to the decision-making process, thus misleading one or more parties seeking to conclude a commercial deal on grounds consistent with those parties responsibilities, to another party not privy to the deal?
In other words, have Viridor and Sutton Council together sought to mislead the residents of Sutton and adjacent boroughs, including Croydon, parties to the South London Waste Partnership, by agreeing to proceed with a contract to build a waste incinerator in the knowledge that a key component of that business plan, the District Heating Network, was stated to be a viable investment, when they knew that anything less that 14.1 KWH built into the contract would nullify the profit to be gained and might have changed the decision to proceed with the investment?
The facility has yet to be completed and the district heating will not come online for at least four years, maybe more, and at a time when KWH costs have been driven down by competition. At what point then, do Barratt’s the builders of the estates being served by the network, need to raise their prices to cover their investment and, by extension, costs they must charge, to the councils in respect of house prices?
Could a court case against Viridor and Sutton Council be justified, which seeks to override a “commercial sensitivity” clause, because that clause acts against natural justice and the interests of the residents of all four Boroughs?
Do shareholder’s interests trump those of residents in deals such as this, and why?