At the share launch meetings, some questions re risks were raised. Here are the answers CEB supplied.
1. Can the government default on the FIT?
Very unlikely, because governments can change the law for the future, but cannot retrospectively nullify legal agreements in the past. No-one would lend to government or sign contracts with it if such actions happened, andhey could be challenged in the High Court. Ofgem FIT register is an agreement to pay 100,000s of people and organisations for 20 years at agreed rate, plus inflation as advertised on government websites. The FIT rates to March 2019 have been announced, as have the arrangements to register and claim up to that date. There would be no financial advantage to government finances from defaulting anyway, since the money for FIT comes from electricity consumers. Retrospective default would force the energy companies who are FIT suppliers to break agreement with their energy supplying customers.
2. Community building– What if the charity fails, closes or sells the building?
Pioneer group has, as its core business, rented homes in Castle Vale area, so it has built its own HQ building on the High Street. It is unlikely to have a better site. There are a range of tenants in the building who provide income.. This applies to also Moseley Exchange and Ackers adventure; their building is the main asset. The lease provides for CEB to be compensated for costs, including lost earnings, if we are forced to remove panels – unlikely to occur in practice
In the unlikely event of the charity failing, a new occupier of the building would have every reason to continue the lease, since CEB is a beneficial ‘sitting tenant’, which feeds cheap electricity into their building. A new owner would not want the building to be empty and earning nothing, but CEB could anyway export all the power and be paid in a power purchase agreement with an energy company (Coop Energy has already offered such a deal). There would be some loss of income in this last unlikely scenario, so we would prefer to continue selling to occupants to our mutual benefit.
3. Co-operative Energy – what if it fails?
CEB can switch to another FIT supplier at any time. The FIT legislation provides for the FIT customers of any energy company that fails to transfer to another company.