Agenda item

This report seeks authority to the procurement arrangements for the bulk energy contracts in relation to the supply of gas and electricity for the London Borough of Brent.

Cabinet noted the comments made by Councillor Lorber who had requested to speak at the meeting in respect of the item.  In addressing Cabinet, Councillor Lorber referred to section 3.2 of the report and sought further details on the basis of the decision taken in 2020 to provide for a two rather than four year energy supply period under the procurement framework along with an outline of any associated financial implications given the current and unprecedented increase in wholesale energy costs.

In responding to the comments raised, Councillor Mili Patel (as Deputy Leader and Cabinet Member for Finance, Resources & Reform) drew attention to the independent assessment of the Council’s energy procurement policy which had confirmed the proposed re-procurement arrangements remained fit for purpose and achieved prices better than market average as well as offering a range of additional services of value to the Council.  The proposed re-procurement and purchasing approach had also been designed to mitigate against overall market risk whilst also seeking to support the Council’s environmental objectives in considering how best to move towards procuring greener and zero carbon energy.

In terms of the overall financial impact (as detailed within section 8 of the report), members were advised of the difficulty in securing fixed term wholesale energy supply costs with the arrangements and approach outlined within the report designed to secure an optimal price for required energy usage and associated services whilst also seeking to mitigate against the risk and minimise significant exposure to further wholesale energy market volatility in the short to medium term.  Members noted the approach outlined also included the potential to avoid significant additional costs on energy contract prices in 2022-23 (on the basis detailed within the exempt appendix to the report).

Having considered the comments made and recognised the difficulties in predicting future market volatility at the time the decision was made to agree a two rather than four year energy supply period Cabinet RESOLVED:

(1)      To approve the award of a contract for the supply of electricity to NPower Limited for two years from 1^st October 2022 via a call-off from LASER Framework Y18003, and

(2)      To approve the award of a contract for the supply of gas to Total Gas and Power for two years from 1^st October 2022 via a call-off from the LASER Framework Y18002, and 

(3)      that alternatively to (1) and (2) above, to approve the award of contracts for gas and electricity to the next ranked Suppliers on Lot 1 of each of the Frameworks referred to in section 5 of the report, if NPower Limited or Total Gas and Power cannot, or do not accept the offer of a Council contract. Such award shall be in accordance with the offer and award process described in Section 7 of the report.

(4)      To approve the Council’s entry into an amended Access Agreement with Kent County Council referred to in sections 7.11 and 7.12 in the report, to enable its participation and purchase of gas and electricity from the Frameworks referred to in (1) and (2) above; and

(5)      To support Brent’s active engagement with the “Renewable Power 4 London Action Plan” work stream, which aims to procure public sector energy for London Public Sector Bodies that is 100% renewable, through collaboration, with the ultimate aim of having a Power Purchase Agreement in place that Boroughs can procure renewable energy from, starting from autumn 2024 (or spring 2025).

Cabinet NOTED the comments made by Councillor Lorber who had requested to speak at the meeting in respect of the item.  In addressing Cabinet, Councillor Lorber referred to section 3.2 of the report and sought further details on the basis of the decision taken in 2020 to provide for a two rather than four year energy supply period under the procurement framework along with an outline of any associated financial implications given the current and unprecedented increase in wholesale energy costs.

In responding to the comments raised, Councillor Mili Patel (as Deputy Leader and Cabinet Member for Finance, Resources & Reform) drew attention to the independent assessment of the Council’s energy procurement policy which had confirmed the proposed re-procurement arrangements remained fit for purpose and achieved prices better than market average as well as offering a range of additional services of value to the Council.  The proposed re-procurement and purchasing approach had also been designed to mitigate against overall market risk whilst also seeking to support the Council’s environmental objectives in considering how best to move towards procuring greener and zero carbon energy, which was welcomed by members.

Councillor Mili Patel then formally introduced the report, which she advised was seeking authority to award the contracts relating to the purchase of gas and electricity (October 2022 – September 2024) on the basis of the procurement process outlined within the report.  In terms of the overall financial impact (as detailed within section 8 of the report) members were advised of the difficulty in securing fixed term wholesale energy supply costs, with the arrangements and approach which had been outlined within the report designed to secure an optimal price for required energy usage and associated services whilst also seeking to mitigate against the risk and minimise significant exposure to further wholesale energy market volatility in the short to medium term.  Members noted the approach outlined also included the potential to avoid significant additional costs on energy contract prices in 2022-23 (on the basis detailed within the exempt appendix to the report).

Having considered the comments made and recognised the difficulties in predicting future market volatility at the time the decision was made to agree a two rather than four year energy supply period Cabinet RESOLVED having noted the exempt information contained within the appendix to the report:

(1)      To approve the award of a contract for the supply of electricity to NPower Limited for two years from 1^st October 2022 via a call-off from LASER Framework Y18003, and

(2)      To approve the award of a contract for the supply of gas to Total Gas and Power for two years from 1^st October 2022 via a call-off from the LASER Framework Y18002, and 

(3)      that alternatively to (1) and (2) above, to approve the award of contracts for gas and electricity to the next ranked Suppliers on Lot 1 of each of the Frameworks referred to in section 5 of the report, if NPower Limited or Total Gas and Power cannot, or do not accept the offer of a Council contract. Such award shall be in accordance with the offer and award process described in Section 7 of the report.

(4)      To approve the Council’s entry into an amended Access Agreement with Kent County Council referred to in sections 7.11 and 7.12 in the report, to enable its participation and purchase of gas and electricity from the Frameworks referred to in (1) and (2) above; and

(5)      To support Brent’s active engagement with the “Renewable Power 4 London Action Plan” work stream, which aims to procure public sector energy for London Public Sector Bodies that is 100% renewable, through collaboration, with the ultimate aim of having a Power Purchase Agreement in place that Boroughs can procure renewable energy from, starting from autumn 2024 (or spring 2025).