Contact: Tony Stephens, ext 6938 email: [email protected]

1. Summary

1.1 The following decisions are sought:

(i) That the Director of Environment seeks competitive energy rates via the Central Buying Consortium for the supply of unmetered energy to street lights, illuminated signs and bollards and traffic signals for periods of up to a maximum of four years.

(ii) That rates be sought for the following alternative mixes of energy:

(a) 100% brown (for comparison purposes only);

(b) 95% brown 5% green;

(c) 90% brown 10% green; and

(d) 100% green.

(brown - energy from fossil fuels)

(green - energy from reusable resources)

(iii) That the Director of Environment be given delegated authority, in consultation with the Executive Member for Environment, to accept the most advantageous rates to the County Council, considering the available funding and the County Council's policy on sustainability for 10% of green electricity by 2010, and for the Chief Executive to enter into any contractual arrangements in respect thereof.

2. Reason

2.1 The present contract for the supply of unmetered electrical energy with Scottish and Southern Energy will cease at midnight on 31 March 2004.

2.2 To ensure that the Director of Environment has the authority to accept the most advantageous contract rates as quickly as possible.

3. Other Options Considered and Rejected

3.1 There is no other means of contracting for a supply of energy on a competitive basis.

4. Conflicts of Interest Declared by the Decision Maker or a Member or Officer consulted - None.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the Matter being dealt with if Urgent - Not applicable.

Approved by: Date:

Councillor K B Estlin

7. Unmetered Energy Procurement - April 2004

7.1 The present contract for the supply of £1.8 million unmetered electrical energy with Scottish and Southern Energy will cease at midnight on 31 March 2004.

8. Background

8.1 Competitive energy procurement has been available for the last seven years and the County Council has made savings in excess of £1 million over this period of time by purchasing its energy via the competitive process.

8.2 The present supply contract provides energy from a mix of 95% brown (fossil fuel) and 5% green (renewable resource) energy sources. The present contract was concluded via the Central Buying Consortium (CBC) Unmetered Supply Tender in 2001 and provided a modest reduction in rates. The County Council's corporate target is to purchase 10% green energy by 2010.

8.3 However, other authorities have contracted to purchase 100% green (including the metered supplies to schools and buildings), which has assisted them to achieve an uptake of 30% green energy at the present time. These councils include Coventry City, Oxfordshire and Essex.

9. Present Market Trends

9.1 The general view is that energy rates have now `bottomed out' and, due to generation capacity, are probably now at their lowest level. Energy costs are expected to start climbing in the future, if only from the increase in the price of gas, although some of the logic behind pricing is due to commercial consideration.

9.2 Bearing in mind the above, consideration should be given to the term of the contract; one option could be a fixed price two or three year contract; an alternative could be a two year contract with the option to extend for a further two years.

9.3 It is also important that officers are able to make quick decisions when accepting the new rates offered through contracts of this nature, as should be noted by the `e' auction recently undertaken by the London Borough of Hackney. This was due in the past to suppliers not leaving advantageous rates available for long and selling the energy on offer to other customers.

9.4 In addition, albeit that volume is not a strong issue with this type of contract, the banding together under this CBC banner does appear to add some weight to the rates offered. However, the fragmented way in which authorities tend to accept offers does not mean that the lowest price wins all the business.

10. Conclusion

10.1 Given the relative ease with which the CBC contract was concluded in the summer of 2001, it would seem reasonable to continue to use this means of procurement, even if Coventry City, the lead authority, decided to go the `e' auction route.

10.2 Given the County Council's corporate aim to reduce dependence on brown energy, it would seem reasonable to seek an option on a 100% green energy rate for street lighting. If such a position were achieved, thereby increasing the overall 'green' energy uptake to approximately 30%, then this could be promoted on the County Council website.

10.3 To further the initiative, competitive rates will be sought for the following combinations of brown and green energy:

(i) 100% brown (for comparison purpose only);

(ii) 95% brown, 5% green;

(iii) 90% brown, 10% green; and

(iv) 100% green.

10.4 The Director of Environment, in conjunction with the Executive Member for Environment, should be granted delegated authority to accept the most advantageous rates, taking into consideration the available funding and the County Council's policy on sustainability for 10% of green electricity by 2010, and for the Chief Executive to enter into any relevant contractual arrangements.

8346/ALS