Agenda item

To consider entering into a new three year contract for energy supplies, with the option to extend for a further two years, with West Mercia Energy; and to consider whether Tewkesbury Borough Council should become the lead authority within the partnership arrangement with Gloucester City Council.

1.      That the Council enters into a new three year contract for energy supplies, with the option to extend for a further two years, with West Mercia Energy.

2.      That Tewkesbury Borough Council becomes the lead authority within the partnership arrangement with Gloucester City Council.  

66.1           The report of the Finance and Asset Management Group Manager, circulated at Pages No. 84-88, detailed options for the Council in terms of its energy contract and Members were asked to agree the entering into of a new three year contract for energy supplies with West Mercia Energy, with the option to extend for a further two years; and to agree that Tewkesbury Borough Council should become the lead authority within a partnership arrangement with Gloucester City Council. 

66.2           The Committee was advised that the Council’s current Contract Procedure Rules required that all contract awards over the European Union threshold were approved by the Executive Committee. The contract with West Mercia Energy offered the Council a product that enabled it to purchase gas and electricity on the wholesale market with the ability to purchase and sell energy throughout the contract term which ensured best value for the purchase price of energy; the contract was within current budgets. The Council’s current contract was with West Mercia Energy but was due to expire on 31 March 2016. West Mercia Energy was a local purchasing organisation which had been established under Section 101 of the Local Government Act 1972 and comprised four constituent authorities. It was a framework agreement and had Official Journal of the European Union (OJEU) notices for the contracts it had with energy companies. In order to access that framework agreement, a purchaser had to have a certain size of energy requirements; on its own Tewkesbury Borough did not have the necessary energy requirements and so a partnership arrangement with Gloucester City, Forest of Dean District and Cotswold District Councils had been entered into previously. Forest of Dean and Cotswold District Councils had both previously opted to leave the consortium and follow other opportunities; however, they were now both reassessing that decision. Together, Tewkesbury Borough and Gloucester City Councils had energy demands which were still of a sufficient size to gain access to the framework. With this in mind it was suggested that a three year contract, with the possible extension of a further two years, was entered into. In addition, given the Council’s expertise with energy contracts, and that particular framework, it was suggested that Tewkesbury became the lead authority for the consortium. This would simply mean that Tewkesbury was the specific point of contact for the framework operators on behalf of the consortium rather than there being any financial liability placed upon it.

66.3           Particular attention was drawn to the table set out at Paragraph 1.5 of the report which compared the prices paid over the last four years in terms of the baseline, market average and review point. The Finance and Asset Management Group Manager explained that all of the comparisons except one were green which meant there were savings on the contract in excess of what the market price would be. In response to a query regarding the Government’s debate on the price of electricity, the Finance and Asset Management Group Manager indicated that the contract would ensure as much flexibility as possible.

66.4           Accordingly, it was