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Liverpool Echo
Liverpool Echo
National
Aran Dhillon & Dan Haygarth

Council could face £18m loss after failed energy investment

A failed investment could expose Warrington Borough Council to a potential loss of £18m.

The council owned a 50% stake in Together Energy, which announced it was to cease trading in January. A report to the audit and corporate governance committee for a meeting last week stated that Together Energy was placed into administration due to ‘volatility and challenges in the European energy markets’.

At the time of going into administration, the council faced a potential liability of £66.17 million – consisting of a £29.32 million Orsted guarantee, £18.85 million of loans and £18 million of preference share capital. The report also stated that Together Energy Limited (TEL) was a ‘well hedged’ company, reports CheshireLive.

READ MORE: Government commissioners to ask for more control over Liverpool Council

It continued: “Following TEL liquidating its hedge position, it is forecast that TEL will received a substantial net return after full repayment of the Orsted liability over the period to October 2023. Adding: “The administrators have advised the council that based on current information they anticipate that the council’s loans (£18.850m) will be repaid in full and there should be no call under its guarantee to Orsted.

“However, the administrators cannot assess the potential level of recovery, if any, against the equity investment. Therefore based on information available at this time, the likely maximum exposure to WBC is the potential loss of the £18m equity investment.

“This has been fully budgeted for in the council’s budget, and since the purchase was undertaken using the capital financing regime any potential loss is already funded through the ongoing MRP charges, and therefore, there will be no further impact on the council taxpayer.”

“The council set up a strategic risk reserve to mitigate any under performance of the diversified investment portfolio and makes a yearly contribution to the reserve. During 2021/22 the council contributed £4m to the strategic risk reserve. As at 31 March 2022 the reserve stood at £32.782m.”

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