Due to the performance of the current contract
using the Yorkshire Purchasing Organisation framework (YPO) the
decision has been reached to explore the use of other providers for
electricity procurement.
The procurement team were therefore asked to look at what other
public sector frameworks were available, other than YPO. Their
feedback was to recommend the use of Crown Commercial Services
(CCS), as this appeared to be the only other framework which
offered a degree of certainty that they could achieve a competitive
market price and had the support structure and expertise
needed.
CCS has purchased energy commodities for over 24 years for the
public estate, principally the crown estate as well as local
government organisations. In total they have a customer base of
1,100 public sector organisations and hence this gives them the
bulk buying power to attain competitive market prices from energy
suppliers. CCS employ a team of energy specialists, which includes
traders, risk managers and energy specialists.
CCS’s electricity frameworks are recognised as being fully
compliant
with regards to OJEU and the Public Contracts Regulations 2015 and
the
national Energy Strategy Team guidelines. Electricity supplies are
to be obtained from a Contract which has been negotiated by a
central or local government purchasing organisation.
A Benchmarking exercise has been undertaken to confirm if the CCS
framework electricity prices were competitive, which has meant
comparing electricity costs for the period 2022/23 for the SYMCA
estate, with those attained by the YPO framework. This has should
the CCS framework to be potentially 20% cheaper than the YPO
framework for that period.
When entering into an electricity supply contract, that guarantees
a set price for any given period, the electric commodity needs to
be purchased prior to the start of any contract. Therefore SYMCA
have to sign up to a contract with CCS by the 15th March to be
included in the buying period April 2023 to March 2024 for eventual
supply of the bought commodity from April 2024 onwards.
The basis of this type of contract is that the total projected
electricity demand for all organisations signing up to the contract
is purchased flexibly over the 12 months prior to the contract
start. Buying flexibly ensures that the best purchase rates are
achieved against market fluctuations, allowing electricity to be
bought at opportune moments (such as when the market is lower),
avoiding market peaks to keep the costs down. Buying electricity in
this manner generally results in a significantly lower commodity
cost than the industry average or that which SYMCA would be able to
achieve alone.
It is to be noted that each year, unless SYMCA formally opt out in
writing or select a different contract with CCS, SYMCA will be
included in the next 1 year contract of the type SYMCA are
currently signed up to.
Decision type: Non-key
Decision status: Recommendations Approved
Notice of proposed decision first published: 20/02/2023
Decision due: 16 Feb 2023 by Section 73 Officer
Contact: Gareth Sutton, Executive Director of Resources & Investment Email: gareth.sutton@southyorkshire-ca.gov.uk Email: Gareth.Sutton@southyorkshire-ca.gov.uk.