Agenda item

Report of the Director of Regeneration and Economy

Cabinet considered a report of the Director of Regeneration and Economy, which would also be considered by Council on 19 March, 2024 which indicated that electricity spending fluctuates due to various factors like global events affecting energy markets. The current Council’s electricity contract ends on 30 September, 2024 and covers electricity for over 250 Council facilities and around 100 other places like schools.  By starting the process early, the chosen supplier can buy energy over time instead of all at once, which helps avoid sudden price increases in the market.

Since 2016, the Council has been using the Eastern Shires Purchasing Organisation (ESPO) framework to buy electricity. ESPO acts as an intermediary, allowing the Council to access wholesale markets typically only available to large buyers. While this framework has helped manage market volatility to some extent, it's not very flexible and historically has not taken full advantage of renewable energy and new market opportunities.

By partnering with E.ON as the new Strategic Energy Partner, the Council can access a customized supply arrangement that opens up opportunities to save costs and generate revenue from new energy market mechanisms. This partnership allows the Council to tap into E.ON's expertise and resources in ways that weren't possible before.

The recommended option presents the best available opportunity for the Council to minimise the costs associated with the supply of electricity. Besides potential cost savings and flexibility, this new approach also aims to deliver more social value directly related to the Council's electricity needs.

A corresponding private report detailing commercially sensitive confidential matters was also submitted for consideration (Minute  98 below refers).

The report  sought approval to enter contracts with E.ON UK PLC and its subsidiaries Npower and E.ON Next, as part of the Strategic Energy Partnership contract procured via competitive dialogue in compliance with Procurement Regulations 2015, signed on September 12, 2023.

In accordance with the Constitution, the report also informed Council of the decision undertaken by the Chief Executive on 19^th December 2023 to exercise emergency functions to secure an immediate hedging of energy using an interim 12 month standard flex contract which will be superseded by the supply contract in the report should the recommendations be approved.

RESOLVED that Cabinet recommends that Council:-

1)  Approves the proposal to enter into an electricity supply contracts pursuant to the Strategic Energy Partnership for the supply of electricity up to 31^st March 2030.

2)  Delegates authority to the Director of Finance and Resources, following consultation with the Director of Regeneration and Economy and the Director of Law and Governance, to finalise the terms and conditions of the supply contract and any other legal agreements required to facilitate delivery of the electricity supply and its ancillary services.

3)  Delegates authority to the Head of Energy Services, following consultation with the Director of Regeneration and Economy, to oversee the ongoing management of the wholesale purchasing strategy during the term of the contract.

4)  Notes the exercise of the emergency functions by the Chief Executive on 19^th December 2023 pursuant to Paragraph 3.8 (a) of Part 2M of the Constitution to secure an immediate hedging of energy using an interim 12 month standard flex contract.