A publicly-owned energy consortium saw a fall in a profits last year.
West Mercia Energy said the by drop to £807,000 – down by £230,000 on 2016/17 – reflected the unexpected winter and news that the UK’s largest gas storage facility will close in five years time.
The business is jointly owned by Shropshire Council, Telford & Wrekin Council, Herefordshire Council and Worcestershire Council and supplies energy to the authorities and others in the public sector.
But despite the poor weather the company still recorded a surplus of £1.47 million with just over £800,000 set to be split between the four councils.
Shropshire is due to receive £208,597 if approved by the Joint Committee next Monday.
James Walton, treasurer for the Joint Committee, said the market was rocked when energy firm Centrica announced in June 2017 that it would be closing its Rough gas storage facility once its gas reserves were sold off over the next four to five years. In turn this will lead to minimal daily withdraws over that period.
He continued: “This storage facility is by far the largest gas storage site in the UK accounting for approximately 70 per cent of storage capacity. Typically gas is injected into Rough during the summer with a view to withdrawing it during the periods of peak demand in the winter.
“Without these reserves to call upon the UK is more reliant on imported gas from Belgium and Holland to complement the normal imports from Norway and is more susceptible to price volatility.”
Mr Walton explained damage to a UK gas pipeline in Scotland in mid December and reports of an explosion at the Baumgarten gas network point in Austria – a key entry point for Russian gas into Europe – led to short-term gas prices spiking by 10p per therm.
But the cold spell which impacted the UK and Europe earlier this year saw short-term price spikes of £2.30 per therm for gas at the beginning of March.
He continued: “Energy market prices will continue to be the key factor affecting the level of turnover and net result of WME in the future.
“Due to the market factors detailed above, energy commodity prices for 2018/19 are above 2017/18 levels.
“Furthermore, the rises in electricity non-commodity costs continues to affect the total billed cost levels. These charges include network charges and
governmental levies and now make up some 60 per cent of the total electricity costs.”
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