Decision details

Officer Decision - Strategy And Award Report For Procurement Of Energy – Flexible September 2020-2025 And Fixed Term Fixed Price (FTFP) 2020-2025

Decision Maker: Strategic Director for Finance and Governance

Decision status: Recommendations Approved

Is Key decision?: Yes

Is subject to call in?: Yes

Purpose:

A new procurement strategy is needed for the Council’s call-off contract for gas and electricity, which is currently with LASER expiring on 30th September 2020. The Council’s combined estimated contract value for gas and electricity is currently £4.2m per annum (for Corporate Properties, Street Lighting and Housing supply).

Decision:

1.            This report requests approval from the Strategic Director of Finance & Governance and the Assistant Director of Property and Facilities Management as required by Contract Standing Orders 22 regarding the Energy Procurement Strategy and Award proposals detailed within this report, to:

 

1.1.     approve the procurement strategy to enter into 2 call off contracts via the PAN-LEP “Abridged” Framework (enhanced LASER Framework dated 12th December 2018) for the Council’s flexible procurement of gas and electricity. This will be for the supply period from 1st October 2020 to 31st March 2023, with the option to continue under a rolling forward buying arrangement up to 31st March 2025 (unless terminated by the Council).

 

1.2      approve LBH&F to continue being a member of London Energy Project (LEP) at a cost of £10,000 per annum for the duration of the Call-off Contract period. This cost is split between current budgets in Housing (£5,000 per annum) and Corporate (£5,000 per annum).

 

1.3      approve the estimated total expenditure to LASER for the following:

a)    to use the LASER Framework and for LASER’s Supplier Management services between 1st October 2020 to 31st March 2025 for Corporate Properties and Housing supply, for which £89,090 per annum (aggregate total for the duration of the four-and-a-half-year contract is £400,905) will be paid to LASER; and

b)    for LASER Bureau Management Fees & Reporting with access to Systems Link Database at the cost of £55,314 per annum for the duration of the contract period split between Housing and Corporate.

 

1.4      approve the award of the Pan-LEP Energy Call-off Contracts for the flexible procurement and supply of gas and electricity up to the value of £4.2m per annum from 1st October 2020 – 31st March 2023, with the option to continue under a rolling forward buying arrangement up to 31st March 2025 (unless terminated by the Council):

a)    Daily and Non-Daily Metered Natural Gas, including Product Classes 1, 2, 3 & 4 with Additional Services Framework Y18002 awarded to Corona Energy; and

b)    Half Hourly and Non-Half Hourly Metered & Unmetered Electricity with Meter Operations & Additional Services Framework Y18003, awarded to Npower Ltd together referred to as “Pan-LEP Energy Call-off Contracts”.

 

2.         To note further action concerning the Pan-LEP Energy Call-Off Contracts shall be the responsibility of the Strategic Director of Finance & Governance and Assistant Director of Property and Facilities Management, namely:

 

a)    to finalise any specific terms of the Pan-LEP Energy Call-off Contracts and carry out all the tasks necessary to facilitate the execution, implementation and operation of the call-off contracts, including the use of ancillary services available under the call-off contracts; and

b)    to review options and adopt alternative price risk management strategies for the supply of flexible procurement of energy, during the supply period in order to minimise risk and market volatility and obtain best value.

 

3.      To approve the use of Renewable Energy Guarantees of Origin (REGO) backed green tariff for Corporate Estates (Schools, Civic buildings, Street lighting, etc) as part of the Council’s commitment to carbon reduction as required.

 

Reasons for the decision:

As described in the report.

Alternative options considered:

1          During this procurement process which reviewed all the options available in the energy market the following central purchasing bodies (CPBs), specialist energy companies and suppliers were reviewed and analysed:

·         Inspired

·         Amber Energy

·         National Energy Hub

·         Crown Commercial Services (CCS)

·         Wind Prospect Operations (WPO)

·         London Energy Project (LEP)

·         LASER Energy Buying Group

 

2          The two largest and most capable CPBs are LASER and CCS. To ensure that energy procurement service providers can deliver effective price risk management and value for money consistently over a period of time, LEP developed a Statement of Requirements (SoR) to assess the capability, capacity and experience of Central Purchasing Bodies. The SoR is a comprehensive list of best practice standards and customer requirements covering energy supplier selection, contract management, buying and risk management and customer services options.

 

3          A detailed summary of the above options is provided within Appendix A Business Case and Procurement Strategy. The Procurement Strategy provides further details regarding options and analysis of the different purchasing options which will provide a clear indication to LBH&F as to which options will be the most viable for LBH&F to adopt.

 

Publication date: 10/10/2019

Date of decision: 09/10/2019

Effective from: 15/10/2019

Accompanying Documents: