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Decision details
Electricity Contract Renewals (large sites)
Decision Maker: Executive Director: Growth and Regeneration
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: No
Purpose:
There is a clear and pressing need to maintain
compliant contracts for heat and power to supply council buildings,
housing, and schools
Failure to make arrangements before the current contracts expire on
31/12/21 would mean the council pays off-contract rates until new
contracts are in place. These rates are up to 100% more
expensive
Decision:
•The decision is to re-tender the three
electricity contracts set out below to 31/3/22.
•An Officer Executive Decision was taken in October 2021 to
extend the contracts for 3 months.
•Energy contract renewals are ordinarily made under delegated
authority following a December 2020 Cabinet Key Decision but cannot
be accomplished within the estimated budget due to the current very
high prices. Wholesale energy prices are currently at unprecedented
levels which are placing significant pressure on council
budgets
•Contracts must be re-let by 31/12/21 to avoid defaulting to
off-contract prices however due to the way that the energy market
is structured, a decision is needed by the xx December. As this
decision is not within the delegated Authority of the Executive
Director, and as a key decision is needed before the date of the
next Cabinet meeting in January there is a clear and pressing need
for the decision to be taken by the Executive director as a key
decision in line with the provisions of the constitution.
•The contracts are for three months (ending 31/3/22) as
alternative procurement strategies are currently being
developed.
•Legal and Procurement services have confirmed it will not be
possible to have new electricity contractual arrangements in place
by 31/12/21.
•A strategy of three-month rolling extensions or re-tenders
has been agreed at the Corporate Leadership Board meeting on
21/12/21, to avoid locking in prices at high levels for any longer
than necessary.
Alternative options considered:
Option 1 - Seek approval at January Cabinet
before re-contracting. Rejected as this would incur additional
costs estimated at £454K because the council would default to
off-contract rates for at least one month, which are up to 100%
more expensive
Option 2 - Run competitive tenders for longer contracts: rejected
as this would commit the council to prices at or near the peak of
the market, for an extended period.
Option 3 -
Publication date: 10/01/2022
Date of decision: 07/01/2022