Purpose

This report summarises the action the Council needs to take to continue with the existing contracts for energy procurement through Government Commercial Agency (GCA) framework. The Council will be able to continue to use the GCA framework for the provision of gas and electricity for up to a further 3 years from 1 April 2027 to 31 March 2030 under appropriate terms. The direct award will enable the provision of electricity for the period from 1 April 2027 to 31 March 2030 for an estimated total sum of £40 million exclusive of VAT. And for the provision of gas for the period from 1 April 2027 to 31 March 2030 for an estimated total sum of £23 million exclusive of VAT.
 

Decision

DECISION: To

1. Approve the London Borough of Tower Hamlets continued commitment to the GCA supply of Energy Framework for the provision of gas and electricity for up to a further 3 years from 1 April 2027 to 31 March 2030 under appropriate terms.
2. Approve the direct purchase of electricity under GCA Supply of Energy Framework for the period from 1 April 2027 to 31 March 2030 for an estimated total sum of £40 million exclusive of VAT, in consultation with the Mayor.
3. Approve the direct purchase of natural gas under GCA Supply of Energy Framework for the period from 1 April 2027 to 31 March 2030 for an estimated total sum of £23 million exclusive of VAT, in consultation with the Mayor.
4. Authorise the Corporate Director of Housing and Regeneration in consultation with the Corporate Director Resources and the Mayor to review the contract annually and make a decision to continue with the GCA for year two and year three of the contract

REASONS FOR DECISION: 

1. London Borough of Tower Hamlets is in ‘evergreen’ rolling energy contracts with GCA acting as the broker and EDF Energy Ltd and Total Energies Gas and Power Ltd as the current energy suppliers.
2. Under the GCA Framework there is a deadline of 10 September 2026 for LBTH to be included in the purchasing window for energy supplies for 2027/28 period. A decision on the continued use of the Framework is therefore required prior to this date to ensure the supply of Gas and Electricity continues at favourable market rates to all LBTH corporate estate, schools and housing communal areas for the period 1 April 2027 to 31 March 2028.
3. Officers are seeking approval to continue the current arrangements for up to 3 years to 31 March 2030 so that LBTH can take advantage of competitive prices as well as flexible purchasing strategies to mitigate against future energy market volatility. The contracts / purchasing strategy will be reviewed annually.
4. The Council can choose not to have a procurement strategy for the supply of natural gas and electricity. This may however result in the local authority paying ‘out of contract’ energy prices where the current predicted expenditure on energy supply will significantly increase, potentially doubling in cost.

ALTERNATIVE OPTIONS:

1. An alternative would be to split the portfolio into different ‘baskets’ (baskets are the different sections under the same framework which can be used for different length contracts).
2. Council needs to be aware that using a longer term more than twelve months for the housing portfolio will need the legislation under S20 to be actioned.

Action by: Corporate Director of Housing and Regeneration