Shetland windfarm - Viking Energy

[Ghostrider]

Actually, I think that VE's statement is fairly clear, although I admit that it would have been better to use different names for each business. The statement needs to be read carefully so as not to mix up the two companies.

 

Viking Energy Limited is the top company set up to represent the Shetland community, and is described in the second paragraph of VE's statement. It is owned 90% by the CT and 10% by Burradale. SSE has no involvement in this company whatsoever. This top company (Viking Energy Limited) will not own the wind farm, nor operate it. It is purely a Holding Company.

 

Next level down: There is then a 50/50 Joint Venture company called Viking Energy (note the absence of the "Limited" after the name). This is the business that will own the wind farm and operate it. This is the business that is owned 50% by the top company Viking Energy Limited, and 50% by the SSE subsidiary. This is also the business that will sell the power to (presumably) SSE under a separate contract, about which we know nothing because the details have not been divulged.

 

This is the company which is described in the first paragraph of VE's statement. In other words, they have described the lower operating company in their first paragraph, and the top holding company in their second paragraph.

 

So even if Burradale sold their shares in Viking Energy Limited to SSE, then SSE still wouldn't have control at any level, neither in the top company, nor in the operating company.

 

And you can't mix the shareholdings in both companies together because it doesn't work that way. It is important to regard each of the two companies as completely separate and independent entities. Each one has to hold separate Board Meetings (Directors) and Shareholders' meetings. These meetings have to be recorded by Company Law. They are completely separate legal entities even if they have the same Directors.

 

I hope this helps.

 

Not really, as what you've outlined above is more or less the understanding I was taking from the quoted paragraphs from Viking Energy's site already. You choose to call Viking Energy one step down from Viking Energy Ltd. I prefer to call it one step up, regardless it doesn't change who they are and what they do one iota, up, down, or sideways, in practice what goes down will be exactly the same.

 

The issue I have is not with Viking Energy Ltd. per se, or with SSE Viking Ltd. both are (apparently) limited companies, and as such there are rules by whch they (should) abide. While it would have earned Viking Energy Ltd. Brownie points had they chosen, in the name of accountability, to explain the nature of what exactly a limited company is, and isn't, and what it can, and cannot, and has to do, in "Idiot Guide" terms to the 22,000 people they are (allegedly) acting on behalf of, the fact they didn't is only their loss, as the information is readily available to anyone who wishes to be to the trouble to seek it out.

 

The problem I have, is with the JV company, Viking Energy. Yes, SSE Viking Ltd. own 50%, and Viking Energy Ltd.own 50%, so far so good. What, as far as I'm aware, we haven't be told, and therefor don't know, is the exact terms and conditions of the JV agreement, and/or the constitution, for want of a better term, that the JV operates under.

 

What you're saying can only happen if at all meetings of the JV SSE Viking Ltd. has one vote, and Viking Energy Ltd. has one vote on all matters, and that whatever Viking Energy Ltd's vote is on any one given issue, is the majority vote of an earlier held Viking Energy Ltd. shareholders meeting.

 

Where do we have any guarantee that this is the case?

[Skunnered]

^^ Well, I don't have any more detailed info on the actual agreements than you do. Certainly the profits will be distributed in proportion to shareholding, and it would be very strange if control at both shareholder level and board meetings level was any different to the proportions of the shareholdings.

 

Anyway, if your main concern is whether SSE can "pull a fast one" on the CT/SIC I would suggest that it is unlikely to be through any fancy foot-work relating to the shareholding or number of directors. What gives me more concern is the agreement or contract between the VE Joint Venture operating company and SSE for the sale/purchase of the power that's generated. VE say that this agreement is in place, but they are not releasing any details. If a price per unit (or formulae) has been agreed in advance, we don't know if SSE has any flexibility to adjust the price in its favour under any changing circumstances in the future. Therefore we don't know if SSE has the ability to suck a huge amount of profit out of the JV for themselves. The extent to which Shetland's share of the profit is truly guaranteed depends very much on the detail of this agreement.

 

We also don't know where the VE JV will sell its ROC (Renewable Obligation Certificates) whether it has been agreed that these will be bought by SSE or whether they will sell them on the open market. The level of profit from this venture depends hugely on the income that the VE JV gets for its ROCs, so this is another area that I am concerned about. Of course all of these issues may already be sewn up tightly, but...?

[MuckleJoannie]

 

The problem I have, is with the JV company, Viking Energy. Yes, SSE Viking Ltd. own 50%, and Viking Energy Ltd.own 50%, so far so good. What, as far as I'm aware, we haven't be told, and therefor don't know, is the exact terms and conditions of the JV agreement, and/or the constitution, for want of a better term, that the JV operates under.

 

 

I downloaded a SCT agenda for a meeting in February 2009 that includes a summary of how the JV would operate. Unfortunately it is not in a format that lends itself to extracting the relevant text easily and at this time of the night I'm not going to type it all out. It is not available on the SCT website now either.

 

It describes Viking Energy as a general partnership under Scots law, ie the same busines structure two or more individuals would form if they did not want to form a limited company. This means that there is no legal obligation to make acounts publically available.

[Skunnered]

^^Thanks for that MuckleJoannie. The plot thickens!

[Ghostrider]

It describes Viking Energy as a general partnership under Scots law, ie the same busines structure two or more individuals would form if they did not want to form a limited company. This means that there is no legal obligation to make acounts publically available.

 

Which is the polite way of saying, the JV is set up in whichever way keeps the fighting they do among themselves to an acceptable level. While I'll admit its very probably an outside chance, with neither the small print of the JV in the public domain, nor a statement one way or the other on the subject from the JV partners, it leaves the possiblity that I've been trying to get at, fully wide open. That while the CT has very dominant control within Viking Energy Ltd. when it comes to Viking Energy, the JV company, we have no way of knowing that when it was set up, that the Burradale 10% of Viking Energy Ltd. didn't hold out for, and get a 5% "free" vote in Viking Energy the JV, matters, thus making the CT presence in Viking Energy, the JV, a minority, should the Burradale 5% opt to vote with SSE Viking Ltd.

 

@ Skunnered: Yup, the selling of product is as worrying, but as I see it, if the possibility exists within the set up of Viking Energy, the JV, that the CT can be voted in to a minority position, we needn't care what's sold, or isn't sold, or for how much, as it will be sold in the way that best benefits the majority, and the minority will just have to lump it.

 

I see Viking Energy have at least tried to waylay fears over the selling agreement details, by including in their bumpf mention that Viking Energy is not obligated to sell to only SSE, or to sell to SSE at all. But I find it more worrying that they felt the need to include that, assumedly as they thought (hoped) it would allay folks concerns. Do they really see the Shetland public as such gullible fools, with SSE a 50% owner of Viking Energy, the fact Viking Energy is neither obligated to sell all or any of its output to SSE, is so much hogwash and a worthless smokescreen. Unless it suits SSE's bottom line to sell output from Viking Energy to another utility, SSE will use their 50% position in Viking Energy to block any moves by the other 50% to sell elsewhere, which in effect creates a situation where Viking Energy is obligated to sell as much of their output to SSE as SSE wants to buy.

[Ichorus]

It's good to see some decent debate with numbers and facts

[KTL]

Anyone can find out director details, appointments and annual accounts for limited companies. http://www.companieshouse.gov.uk/

Each report is only £1. Old 363a reports show shareholdings, this report now called AR01.

 

Re company structure: Viking Energy limited (VEL) is 90% owned by Charitable Trust, and 10% by 4 private individuals - one of whom, David Thomson, just happens to be employed by Viking Energy Limited and just happens to be one of the private shareholders.

 

Any spin about "Burradale" directors is just to muddy the already fetid waters.

 

The partnership is between the corporate entities of Viking Energy limited and SSE Viking Limited. Viking Energy Partnership (VEP) is just a partnership, so no company house information available. The shareholding situation is irrelevant to the partnership. It's basically 50/50 SCT and SSE, each directing whoever they put to the meeting. This means that Charitable Trust trustees control, direct, and are responsible for the activities of Viking Energy and the conduct of their representatives on the partnership. This is why 9 councillors voted for their own development.

 

What determines the partnership is the partnership agreement - signed by the SIC, and then transferred to the SCT. As much as I can see in the public domain, each company provides 2 representatives to the partnership to make decisions. I.e. 1 vote each, 4 people, 4 votes. The partnership has a rotating chair - currently Chris Marden from SSE. The chair doesn't have a casting vote, so all decisions have to be unanimous. The public have been refused access to the partnership agreement signed in our name, but some councillors have seen it.

 

If SSE bought out the 4 private shareholders, it would probably have no impact on partnership control.

 

Personally I find the relationship between SCT and the four minority shareholders much more curious.

[Skunnered]

^^I agree KTL. I'm not really concerned about any possible future "deal" between SSE and the private (Burradale) shareholders, but I am rather suspicious about the Joint Venture being set up as a private partnership as opposed to a limited company, so that the public are unable to see any of the details, either of the agreement, or any of the management decisions or transactions. The whole thing is veiled in a cloud of secrecy, which is very bad considering that this whole project belongs to the Shetland community who are denied access to what's going on.

 

I can understand, to some extent, why the contract between the JV and SSE for the sale of the power should not be made public in full detail, because that is a commercial contract involving a public limited company (SSE), but I do believe that the essential elements of it should be told to the public because then the Shetland public would be in a better position to judge the level of risk that's being undertaken on their behalf.

 

I'm astounded that even some of the Councillors are not privy to all of the detail. Now that's a real worry. Is it because they can't be bothered to enquire, or are they not allowed to know?

[KTL]

I don't think there is any current deal to sell power to anybody at the moment. I would be very surprised if there were.

The partnership don't know the eventual size of the proposed windfarm, don't know the cost of transmission, and have no idea as to when electricity from the project would be available. On that basis I don't think they have much of a basis to negotiate any sale of electricity at the moment.

Trying to negotiate a power purchase agreement or any other mechanism at this point could leave them with a commitment to sell for less than the cost of production. In any business that is a recipe for bankruptcy.

[Skunnered]

^^That's very true, but I'm sure I saw somewhere that, when asked about their claim that income was "guaranteed", VE said that they already had agreement for the selling price of the power well into the future. Can't remember where I saw that though, maybe someone else is aware of this statement?

[MuckleJoannie]

 

The partnership is between the corporate entities of Viking Energy limited and SSE Viking Limited. Viking Energy Partnership (VEP) is just a partnership, so no company house information available. The shareholding situation is irrelevant to the partnership. It's basically 50/50 SCT and SSE, each directing whoever they put to the meeting. This means that Charitable Trust trustees control, direct, and are responsible for the activities of Viking Energy and the conduct of their representatives on the partnership. This is why 9 councillors voted for their own development.

 

What determines the partnership is the partnership agreement - signed by the SIC, and then transferred to the SCT. As much as I can see in the public domain, each company provides 2 representatives to the partnership to make decisions. I.e. 1 vote each, 4 people, 4 votes. The partnership has a rotating chair - currently Chris Marden from SSE. The chair doesn't have a casting vote, so all decisions have to be unanimous. The public have been refused access to the partnership agreement signed in our name, but some councillors have seen it.

 

 

From the CT report I mentioned above

 

4.1.6 The partnership board (the “PartnershIp Boardâ€) comprIses 3 representative of each Partner.

 

 

4.1.10 All property required for the Business shall be vested In and owned by the Partnership.

 

4.1.11 All planning applications and all applications for all other consents required for the Business shall be in the name of the Partnership.

 

4.1.12 All rights and obligations as regards national grid connection(s) shall (subject to the approval of lhe National Grid) be In the name of the Partnership.

 

4.1.13 All strategies relating to procurement, construction management, operation and maintenance and electricity trading shall be developed by the Partnership Board.

 

4.1.16 The inherent danger of a two party, equal share partnershIp Is that a deadlock situation will be reached in respect of a particular issue or several issues. The Agreement provides for such cases to be referred firstly to the chairman of the Company and a member of the executive committee of SSE. If this referral does not resolve the dispute within 20 business days, the dispute will be referred to the

chairman/chief executive of the Addressee and the chief executive of the ultimate holding company of SSE. If this does not resolve the impasse within 20 business days, the Partners may appoint a neutral adviser who will seek to reach a solution using alternative dispute resolution procedures. After passage of a further 20 business days without resolution, the parties must negotiate in good faith for a fair and equitable division of the Business. Each Partner must be left with economically viable business capable of independent operation.

 

[ArabiaTerra]

A couple of relevant news stories from the BBC today:

 

http://www.bbc.co.uk/news/business-12005593

 

http://www.bbc.co.uk/news/uk-scotland-scotland-business-12007110

[orkneypaul]

The prospect of jumping into bed with the dictators that is SSE scares me in 2002 they told the goverment what they wanted and with their threats the goverment crumbled on subsidy on already profitable hydro schemes so the bunch of amatures in the town hall have no chance

[shetlandpeat]

More nuclear power stations on the way, higher bills to pay for them.

 

Didn't see that coming.

 

Wonder what ocean or island are they gonna dump the waste?

 

The French are in the running as they already want to invest 20% or 20 billion.

 

And folk are arguing over some peat and some access roads.

[groilick]

More nuclear power stations on the way, higher bills to pay for them.

Wonder what ocean or island are they gonna dump the waste?

 

Viking Energy will hae pleny o quarry hols trow da hills o Eid, Da Kames an Nesting fur dem tae dump hit in. Dan dir'll be something idder fur Nickerson's un-born Shetlanders tae worry aboot.