Archived decisions

Contact: Julian Higgins, ext 7034 email: [email protected]

1. Summary

1.1 The present contract for the supply of £3.3 million of unmetered electrical energy over a two year period with EON will cease at midnight on 31 March 2008, and it is necessary to put in place a contract for the supply of electrical energy thereafter.

2. Recommendations

2.1 That competitive energy rates be sought via the Central Buying Consortium for the supply of unmetered energy to street lights, illuminated signs and bollards, and traffic signals.

2.2 That prices should be sought for the following options:

(i) 100% brown;

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

(iii) 100% green.

2.3 That the Director of Environment, in conjunction with the Chief Executive, be given authority, in consultation with the Executive Member for Environment, to accept the highest green electricity mix that can be afforded, considering the available funding, the County Council's policy on sustainability for a minimum 10% of green electricity by 2010 and the Government's carbon trading proposals, and for the Chief Executive to enter into any relevant contractual arrangements.

3. Introduction

3.1 Competitive energy procurement has been available for the last 10 years and the County Council has made savings in excess of £1 million over this period by purchasing its energy via the competitive process. However, in spite of the competitive process, during the last four years, prices have risen.

3.2 The present supply contract provides energy from 100% green (renewable resource) energy sources. The present contract was concluded via the Central Buying Consortium Unmetered Supply Tender in 2006. The County Council's corporate target is to purchase a minimum of 10% green energy by 2010, however with similar rates offered for brown and green energy alike in 2006 it was possible to purchase 100% green energy. The County Council would wish to continue this trend if possible in 2008. Street lighting energy supplies may be included in the Government's carbon trading proposals and the potential impact on the Council's trading position needs to be considered.

3.3 By way of explanation, brown energy is generally derived from fossil fuels, such as coal, gas and oil, whilst green energy is produced from wind, gas from discontinued waste tips and some hydroelectric applications.

3.4 With the Joint Private Finance Initiative Project it had been thought that the County Council would join up with both West Sussex, Southampton and possibly Portsmouth in seeking competitive energy rates. However, West Sussex did not wish to move from its present arrangement with Laser (a South Eastern authorities procurement company). Portsmouth has not made any further comment following an initial enquiry and Southampton is still considering its response.

4. Present Market Trends

4.1 The general view is that energy rates are becoming more volatile and, whilst prices are much the same as two years ago, recent competitive rates in the market place have varied from just over 6p per unit to just over 8p in recent months. In addition the price of oil has increased to its maximum and there are warnings in the technical press that energy prices are on the move upwards. Energy costs are expected to continue to rise in the long term and, whilst January has been seen as the operative month to seek a new contract rate, given the upward trend of prices it is considered prudent that a price should be sought as soon as possible for a contract start on 1 April 2008.

4.2 When making a decision on e-type contracts it is important that authority is given to be able to make quick decisions in accepting any new rates offered through contracts of this nature. This is due to suppliers not making advantageous rates available for longer that a few hours at a time when tenders are opened. It is, therefore, proposed that the Director of Environment be given authority, in consultation with the Executive Member for Environment, to accept the most advantageous tender.

5. Impact Assessments

5.1 The purchase of unmetered energy seeks to obtain up to 100% green energy which has benefits to the environment in reducing green house emissions and other pollutants. Assessment of the Race Relations (Amendment) Act has been considered in this process; no adverse impact has been identified to any member of society.

6. Conclusion

6.1 Given the relative ease with which the e-type contract was concluded in early 2006 it would seem reasonable to continue to use this means of procurement.

6.2 Given the County Council's corporate aim to reduce dependence on brown energy, and with the rates for green and brown energy being similar in the past, it would seem reasonable to seek an option on an up to 100% green energy rate for street lighting.

1484Rpt/JAH