Agenda item

AUTHORISATION TO PROCEED TO CONTRACT: ENERGY CONTRACTS

Decision:

(1) The award of further contracts be approved for the supply of electricity and gas via the United Learning Trust Procurement Services framework via a mini-competition for a contract duration of 3 years commencing October 2022.

 

(2) An annual budget from October 2022 of £4,026k be approved for the purchase of Renewable Energy Guarantees of Origin (REGO) backed electricity, an increased requirement of £1,888k on the existing budget:  Members note that the cost would be £3,965k for brown electricity, which would be a required budget increase of £1,827k.

 

(3) An annual budget from October 2022 of £1,095k be approved for the purchase of Renewable Gas Guarantees of Origin (RGGOs) backed gas, an increased requirement of £736k on the existing budget;  Members note that the cost would be £979k for brown gas, which would be a required budget increase of £620k.

 

(4) A drawdown from the unallocated inflation provision in the 2022/23 Central Contingency be agreed of £1,312k for renewable energy, or £1,224k for brown energy, for the part year increased cost in 2022/23, and to reflect the full year annual budget impact in the financial forecast.

 

(5) It is noted that the sums above are the indicative cost for first year of the 3 year contract - energy market volatility is hard to predict and cost may go up in years 2 and 3 or may fall.

 

(6) REGO electricity and RGGO gas will be purchased which will cost more than brown energy.

 

(7) Flexible procurement energy contracts be opted for to purchase energy in tranches during the period of the contracts.

 

(8) Authority be delegated to the Chief Officer to select suppliers based on quality and cost (management and delivery) criteria following the mini-competition; the cost criteria are the supplier management fees for servicing the account and delivering the flexible product mechanism - these elements are charged and added by the supplier to the cost of wholesale energy prices. The actual cost of energy shall be determined by the wholesale energy prices at the point of purchase plus the supplier’s management and delivery fees and any other and any ‘industry set’ pass through network charges.

 

(9) Authority be delegated to the Chief Officer to finalise the energy prices based on the quote at the point of the procurement.

 

Minutes:

Report HPR2022/031

 

The Leader had agreed in October 2020 the procurement strategy for energy supplies.  The agreed approach was to award contracts for the supply of electricity and gas via the United Learning Trust Procurement Services framework over a period of five years, with an initial fixed term deal of two years. The agreed approach was subject to a review within the first two years, prior to any further call offs from the framework.

 

The report presented a review of the current gas and electricity contracts and sought approval to award further contracts for the Council’s electricity and gas supplies via a flexible energy purchasing route for a further 3 years using the United Learning Trust framework following a mini-competition.

 

The report also highlighted that, subject to members’ consideration, the budget for green sourced gas and electricity supplies would need to increase to £5.12M due to increases in supply costs.

 

The report had been scrutinised by the Executive, Resources and Contracts PDS Committee at its meeting on 22nd June and the Committee had supported the recommendations.

 

RESOLVED that

(1) The award of further contracts be approved for the supply of electricity and gas via the United Learning Trust Procurement Services framework via a mini-competition for a contract duration of 3 years commencing October 2022.

 

(2) An annual budget from October 2022 of £4,026k be approved for the purchase of Renewable Energy Guarantees of Origin (REGO) backed electricity, an increased requirement of £1,888k on the existing budget:  Members note that the cost would be £3,965k for brown electricity, which would be a required budget increase of £1,827k.

 

(3) An annual budget from October 2022 of £1,095k be approved for the purchase of Renewable Gas Guarantees of Origin (RGGOs) backed gas, an increased requirement of £736k on the existing budget;  Members note that the cost would be £979k for brown gas, which would be a required budget increase of £620k.

 

(4) A drawdown from the unallocated inflation provision in the 2022/23 Central Contingency be agreed of £1,312k for renewable energy, or £1,224k for brown energy, for the part year increased cost in 2022/23, and to reflect the full year annual budget impact in the financial forecast.

 

(5) It is noted that the sums above are the indicative cost for first year of the 3 year contract - energy market volatility is hard to predict and cost may go up in years 2 and 3 or may fall.

 

(6) REGO electricity and RGGO gas will be purchased which will cost more than brown energy.

 

(7) Flexible procurement energy contracts be opted for to purchase energy in tranches during the period of the contracts.

 

(8) Authority be delegated to the Chief Officer to select suppliers based on quality and cost (management and delivery) criteria following the mini-competition; the cost criteria are the supplier management fees for servicing the account and delivering the flexible product mechanism - these elements are charged and added by the supplier to the cost of wholesale energy prices. The actual cost of energy shall be determined by the wholesale energy prices at the point of purchase plus the supplier’s management and delivery fees and any other and any ‘industry set’ pass through network charges.

 

(9) Authority be delegated to the Chief Officer to finalise the energy prices based on the quote at the point of the procurement.

 

 

Supporting documents: