Decision details

Electricity Contract Renewal (smaller 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 contract expires 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 extend the electricity contract set out below to 31/3/22.
•An Officer Executive Decision was taken in October 2021 to extend the contracts for 3 months (except DN508623 which hadn’t expired at that time), and this decision seeks a further extension.
•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
•The contract must be extended 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 contract extension is 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 arrangement 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 £361K 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