Nottingham City Council has agreed to lend its energy company a further £9.5 million more to help pay its upcoming bill to energy regulator Ofgem.
At the start of the month the regulator said Robin Hood Energy (RHE) had to pay a £9.5 million bill for renewable energy.
The firm, whose customers include Jeremy Corbyn, had hoped to spread the repayments ahead of anticipated high demand this winter.
But the regulator said it could take its licence from the firm if the payment was not settled by the end of October.
All the firm's energy now comes from green sources, but the company does not create its own electricity, meaning it has to pay a subsidy to Ofgem to fund green initiatives.
Now, Labour-run Nottingham City Council has agreed to pay £9.5 million to RHE, allowing the company to pay the bill in full.
The loan is expected to be paid off by RHE in full in the next six months, and the council will receive interest on its loan.
Gail Scholes is the CEO of Robin Hood Energy said: "We have agreed an arrangement with Nottingham City Council which will see us paying our Renewable Obligations Certificate (ROCs) payment in full by the October deadline.
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“The arrangement will see us paying our shareholder (Nottingham City Council) back over the next 6 months with interest."
The decision was made by city council bosses at a meeting behind closed doors on Tuesday afternoon (October 22), on the grounds of commercial sensitivity.
It is understood that RHE had requested a payment plan to be set up with Ofgem, to help spread the load of the repayments.
This would have helped with cash reserves ahead of the winter season, and i when Government reports have predicted the wholesale cost of fuel could rise.
With many customers on fixed-rate tariffs for their energy, this could have an impact on all energy companies, hence the desire from RHE to maintain cash in reserve.
A City Council spokesperson said: “Nottingham City Council has agreed to continue its support of Robin Hood Energy to enable it to continue the successful work it has undertaken to date.
“Our Executive Board has today agreed to provide assistance to RHE to enable it to make its renewable obligations in line with the Ofgem requirements. This will be repaid by the end of this financial year at a state aid compliant rate of interest.”