Purpose of the report:
The purpose of the report is to seek approval to enter into Supply Contracts with the suppliers appointed under the Crown Commercial Service Framework Agreement for Supply of Energy 2 (RM6251) for the supply of electricity and associated services (Lot 1) and the supply of natural gas and associated services (Lot 2) with effect from 1 April 2024.
Reasons for the Recommendations:
The recommendation in the report were presented as Oldham Council currently procures its energy through Crown Commercial Service (“CCS”) framework arrangements.
The CCS Framework for the Supply of Energy and Ancillary Services (RM6011) commenced on 14 August 2019 and expired on 1 October 2023. Electricity and ancillary services were supplied by EDF Energy Customers Limited under Lot 1 and natural gas and ancillary services were supplied by TotalEnergies Gas & Power Limited under Lot 3. The Council was a party to a Supply Contract with each of the suppliers. Electricity and Gas were supplied to the Council under the RM6011 framework arrangements until 31 March 2024.
The CCS Framework Agreement for Supply of Energy 2 (RM6251) commenced on 21 February 2023 and will expire on 20 February 2027. There are two lots under the RM6251 Framework Agreement; Lot 1 - Supply of Energy - Electricity and Additional Services and Lot 2 - Supply of Energy – Natural Gas and Additional Services. The sole supplier under Lot 1 is EDF Energy Customers Limited (“EDF”) and the sole supplier under Lot 2 is TotalEnergies Gas & Power Limited (TotalEnergies”).
The Council should have entered into a Supply Contract with each of the appointed suppliers under the replacement RM6251 Framework Agreement prior to 1 April 2024, but the transition from RM6011 to RM6251 did not run as planned.
Therefore, retrospective approval is needed to enter into a replacement Supply Contract with each of the appointed suppliers for a term commencing on 1 April 2024. The template Supply Agreement shared by EDF states that the term runs from the Earliest Supply Start Date, which will be 1 April 2024 for the Council until the expiry or earlier termination of the final associated delivery period.
The Council generally opts for Locked 6 (L6), which offers a 12-month fixed price. The trading begins 6 months (1 October to the 31 March) annually. The delivery period starts on the 1April for 12 months. The Council is automatically entered into the subsequent 12-month contract period without needing to provide confirmation. However, if the Council wishes to opt out of the next 12-month period, it must notify CCS accordingly prior to the 15th September deadline before delivery period.
Options/Alternatives:
The options that Cabinet considered in relation to the submitted report were:
Cabinet Members were advised that there was not currently a viable alternative option for the 2024/25 financial year, particularly because the Council confirmed its requirements to CCS for the provision of electricity and natural gas over the 1 April 2024 – 31 March 2025 delivery period back in September 2023. However, other options can be considered for the future. It is anticipated that preparing to change the contractual arrangements for the provision of electricity and gas would need a minimum of eighteen months to two years preparation. This would ensure the procurement process is not rushed and that the transition to alternative suppliers (if required) is managed to minimise the impact of the transition on officers and other suppliers, to avoid transfer objections and out of contract periods, and to incorporate bridging contract periods.
Decisions:
That the Cabinet:
1. Authorises a Supply Contract for electricity and ancillary services to be finalised and entered into between the Council and EDF Energy Customers Limited under Lot 1 of the CCS Framework Agreement for Energy Suppliers 2 and for a Supply Contract for natural gas and ancillary services to be entered into between the Council and TotalEnergies Gas & Power Limited under Lot 2 of the CCS Framework Agreement for Energy Suppliers 2, each for a 4-year term from 1 April 2024