Agenda item

(To receive a report by Andrew Househam, Commercial and Procurement Manager, on the Approval to Award a Contract for Gas Provision for Lincolnshire County Council’s Corporate Property Portfolio, which is due to be considered by the Executive Councillor for Children’s Services, Community Safety and Procurement, between the 17 and 23 December 2021. The views of the Board will be reported to the Executive Councillor as part of her consideration of this item)

Consideration was given to a report by the Commercial and Procurement Manager, which invited the Board to consider a report on the Approval to Award a Contract for Gas Provision for Lincolnshire County Council's Corporate Property Portfolio, which was due to be considered by the Executive Councillor for Children’s Services, Community Safety and Procurement between the 17 and 23 December 2021.

In line with the National Procurement Strategy and as a result of ongoing uncertainty and price rises in energy, it was proposed that the Council continued to maintain the Purchase in Advance commodity strategy, which also provided the flexibility to annually consider green gas as the market developed as well as providing a complete bill validation service that would eradicate the need for utility bill audits. The Purchase in Advance Strategy provided budgetary certainty in an exceptionally volatile market.

It was proposed that the Council award the contract for Gas Services and Provision to ESPO as they had performed well historically and provided value for money in past contracts. As a member of ESPO, the Council was unable to influence the Energy Market but could influence its commodity trading strategy having a seat on the Energy Governance Panel.

The report also proposed that the Council continued to purchase brown gas, which would be reviewed annually.

Consideration was given to the report, and during the discussion the following points were noted:

·       The annual consideration of whether to purchase green gas would be based on availability and financial viability when compared to the cost of purchasing brown gas, taking into account the green agenda as well. It was recommended that the first annual review of whether to purchase green or brown gas should be brought back through the decision-making process to consider the financial viability of purchasing green gas and whether the market had changed.

·       The green gas market was very new and underdeveloped. There was currently not enough green gas available to enable ESPO to meet all its portfolio. It was noted that no council under the ESPO portfolio was currently buying green gas. In addition, the current prices for green gas were extremely high.

·       The Council had made a commitment to net zero carbon by 2050 and had developed the Green Masterplan which set out the guiding principles of how this challenge would be met. It was recognised that moving to green gas would contribute to this ambition, but that this was not currently achievable due to the underdeveloped market. It was unlikely that this situation would change within the next 12 months.

·       Support was given to the Purchase in Advance approach as this would allow the Council to fix its price for 12 months to ensure stable costs and reduce the financial implications for the Council. This approach had saved the Council over £234,000 in 2021/22 based on the current wholesale gas costs.

·       It was recognised that the disparity in price between green and brown gas was likely to reduce in the future, which would then enable the Council to give due consideration between financial viability and the green agenda.

RESOLVED:

1.      That the recommendations, as set out in the Executive Councillor report, be supported;

2.      That a summary of the comments made by the Board be reported to the Executive Councillor for Children’s Services, Community Safety and Procurement as part of her consideration of this item.