Agenda item

 The Corporate Director of Adults and Housing and the Chief Finance Officer submit a joint report that describes how extending the network of our district heating schemes will help achieve transformation of Leicester into Britain’s Sustainable City.  The Board are asked to provide comments on the report prior to its consideration by the Cabinet. 

The Corporate Director of Adults and Housing submitted a report that described how extending the network of our district heating schemes would help achieve transformation of Leicester into Britain’s Sustainable City.

The Service Director, Housing Renewal, Options and Development introduced the report and explained that the proposed scheme would be fuelled by gas, but by having the network in place provided future potential for using renewable fuels on a large scale, with the possibility of near zero carbon heat and power.  Furthermore, it was made clear that CHP units always contained a subsidiary engine that allowed for a dual-fuel arrangement.

In terms of the delivery options, the Board heard that officers had considered that a private led approach offered the best opportunity to minimise risk and ensured an expertly run scheme was provided. Officers had recommended a tendering process.

One Member of the Board felt that the scheme could contribute to the reduction of carbon emissions, and also supported the possibility of offering a bond issue to the citizens of Leicester to finance the scheme as an alternative to a private provider.

In response to a point raised by a Member of the Committee, the Service Director, Housing Renewal, Options and Development confirmed that the costs of District Heating to tenants should rise in accordance to real costs it was proposed that the system would include individual metres to allow people to control their fuel consumption. 

Another Member of the Committee was keen to ensure that tenants were appropriately consulted on any proposed changes.  The Service Director, Housing Renewal, Options and Development proposed to present the report to the Housing Management Board.

One Member of the Committee expressed concern that the Carbon Footprint and other EMAS requirements for the One Leicester strategy may not be met as detailed in the risk matrix and stated that it was vital for this key performance indicator to be met.  In response to this, the Board heard that the risk matrix catered for all eventualities but that the scheme was likely to make a worthwhile contribution to achieving this target.

A Member of the Board enquired what the possible cost implications would be if the Council carried out the scheme in-house.  It was reported that the authority would have to heavily finance the scheme that was not anticipated to break even until 2015.

It was suggested that, prior to a further report being presented to Cabinet on the specific details of what the Council could buy before expressions of interest were formally sought from the market, that a Task Group would be set up to further explore the issues raised by the Board, including the possibility of a bond issue, to offer recommendations to the Project Manager.  The Board supported the suggestion.

Councillor Blower abstained from the decision as she was concerned that the provider could monopolise the market.

Councillor Suleman abstained from the decision as he felt that a decision to contract a private provider was being taken too quickly.

RESOLVED:

(1)               that the principles of implementing the scheme as set out in the report to extend district heating and the use of combined heat and power in central Leicester and that a private led approach be chosen as the preferred delivery method be supported.

(2)               That the Board supports the authorisation of expenditure of up to £100,000 for a Project Manager and technical advice from the provision of £400,000 for combined heat and power, approved as part of the corporate capital programme.

(3)            That prior to a further report being presented to Cabinet on the specific details of what the Council could buy before expressions of interest were formally sought from the market, a Task Group be set up to further explore the issues raised by the Board, including the possibility of a bond issue, to offer recommendations to the Project Manager.