Agenda item

i. Adopted the following purchase strategy:

a.  Approved the purchase of 50% of the ‘23/24’ energy volume for Summer 23 and Winter 23.

b.  Approved the purchase of the remaining energy volume if the wholesale price for that forward period falls below £150/MWh (power) and 150p/therm (gas), the floor price and where feasible well below the floor price.

c.  Approved the default position to purchase energy volume (power) on a month ahead, and gas on a day ahead (spot price) should wholesale prices for forward period remain above £150/MWh (power) and 150p/therm (gas).

d.  Set a wholesale energy market price cap for the month ahead and Winter 23 of £250/MWh (power) and 300p/therm (gas) and if markets increase such that the cap is expected to be exceeded, or is exceeded, then Cabinet approves the purchase of the remaining energy volume for 23/24 to limit further cost exposure.

ii. Delegated authority to the Executive Director of Place & Communities, in consultation with the Executive Director of Finance and Commercial (the S151 officer) and the Lead Members (Finance Oversight & Assets and Customer Services, Procurement & Performance) to purchase energy in line with the above guidelines.

iii. Required officers to report back to Cabinet by February 2024 on the current state of energy markets and any proposed changes to purchasing strategy of future energy volume in the final year of the flex energy contracts 24/25.

The Lead Member for Financial Oversight & Council Assets introduced a report on the purchasing strategy for energy.

The volatile market conditions following the war in Ukraine were noted and the strategy proposed aimed to minimise the Council’s exposure to further price increases.  If agreed, the Council would purchase 50% of its energy volume in advance and the detailed proposals were set out in the report.  It was noted that since the report had been published the PFI schools had indicated that they no longer wished to be included in the contracts and this would have an impact on the volumes purchased.

The Cabinet agreed the recommendations subject to the inclusion of the Lead Member for Customer Services, Procurement and Performance, as well as the Lead Member for Financial Oversight & Council Assets, in the Member consultation process as part of the delegation.  Decisions taken under the delegated authority should be reported to Members as highlighted in the Commissioners comments.

Resolved –

(i)  That the following purchase strategy be adopted:

a.  Approved the purchase of 50% of the ‘23/24’ energy volume for Summer 23 and Winter 23.

b.  Approved the purchase of the remaining energy volume if the wholesale price for that forward period falls below £150/MWh (power) and 150p/therm (gas), the floor price and where feasible well below the floor price.

c.  Approved the default position to purchase energy volume (power) on a month ahead, and gas on a day ahead (spot price) should wholesale prices for forward period remain above £150/MWh (power) and 150p/therm (gas).

d.  Set a wholesale energy market price cap for the month ahead and Winter 23 of £250/MWh (power) and 300p/therm (gas) and if markets increase such that the cap is expected to be exceeded, or is exceeded, then Cabinet approves the purchase of the remaining energy volume for 23/24 to limit further cost exposure.

(ii)  That delegated authority be given to the Executive Director of Place & Communities, in consultation with the Executive Director of Finance and Commercial (the S151 officer) and the Lead Members (Finance Oversight & Assets and Customer Services, Procurement & Performance) to purchase energy in line with the above guidelines.

(iii)  That officers be required to report back to Cabinet by February 2024 on the current state of energy markets and any proposed changes to purchasing strategy of future energy volume in the final year of the flex energy contracts 24/25.