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Issue - meetings

Energy Purchasing (urgent decision)

Meeting: 01/09/2022 - Executive (Item 31)

31 Energy Purchasing pdf icon PDF 275 KB

Additional documents:

Decision:

AGREED RECOMMENDATIONS

 

Reasons for the decision – to achieve a large cost avoidance compared to current market prices.

Other options considered – as detailed in the report, two options are available

Conflicts of interest / dispensations granted – none

 

Link to the report

 

Minutes:

This decision was taken under the urgency provisions at Procedure Rule 93 of the Council’s Constitution. The reason for use of the urgency procedures was as follows: 

 

Energy prices for 2023/24 have risen significantly in the past few weeks, representing an increase of over £20m. The council has an opportunity to access significantly lower prices by terminating its existing energy supply contracts and joining a public buying organisation (PBO), which has already purchased most of next year’s energy supplies at a rate lower than current market rates. The potential cost avoidance at current rates is several million pounds. The PBO requires the council to contract with them by mid-September, thus requiring an urgent decision. It is not possible to postpone the decision to a future meeting of the Executive.

 

If the council is unable to join the PBO, the council’s energy consultants have advised that the council should start to hedge (purchase in advance) for next year. The last contract modification notice raised the purchasing threshold to £64m. However, there is only £9m unspent within this, which is insufficient to carry out significant hedging. The issuing of another contract modification notice is therefore urgently required in order to hedge for next year.

 

Councillor Champion introduced the report. It was explained that the Council would seek to enter into a new energy supply contract with a public buying organisation, however if this was not possible, then the council would seek to hedge for the following year.  Members and officers discussed the challenging financial situation related to energy pricing and the possible impacts this would have across council services.

 

RESOLVED:

 

(i)     To agree to enter into a new energy supply contract arrangement with a Public Buying Organisation (PBO), as set out in section 6.4 and appendix 1 of the report;

 

(ii)    That authority be delegated to the Corporate Director for Environment to finalise the details and length of term of the energy supply contract arrangements;

 

(iii)  That the mutual termination of the Council’s existing energy supply contract be agreed, and authority be delegated to the Corporate Director for Environment to finalise the termination agreement, following consultation with the Director of Law and Governance;

 

(iv)  That the issuing of a contract modification notice to raise the 2020–2024 energy procurement threshold from £64m to £80m be approved.

 

Reasons for the decision – to achieve a large cost avoidance compared to current market prices.

Other options considered – as detailed in the report, two options are available, (1) to transfer to a PBO, or (2) should the council not be able to transfer into a PBO, to start make hedging purchases for 2023/24

Conflicts of interest / dispensations granted – none