Decision Maker: Executive Board
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: Yes
Approval of amendments to the Council’s gas and electricity purchasing strategy to allow the optimum level of forward hedging of energy prices in conjunction with other measures set out within the Energy Strategy and Action Plan as approved by Executive Board in February 2022.
Further to Minute No. 118, 9th February 2022, the Director of Resources submitted a report setting out the current and future financial implications for the Council in terms of energy usage, to illustrate the potential future risks of different scenarios, and which sought approval of proposed amendments to the Council’s existing energy purchasing strategy in order to manage such risks most effectively.
Prior to the meeting, with the agreement of the Chair, Board Members were in receipt of supplementary information in the form of an addendum to this report, which provided updated information with regard to energy purchasing for Members’ consideration.
In introducing the report, the Executive Member for Infrastructure and Climate highlighted the aims of the submitted report which were to take actions in order to help manage the current risks associated with energy costs and purchasing. The Executive Member also provided the Board with a summary of the work being undertaken in a number of related areas including the decarbonisation agenda, the tackling of fuel poverty and the initiatives which aimed to reduce energy costs for the Local Authority.
Responding to a Member’s enquiries on a number of issues, the Board received further information, as illustrated in the addendum, regarding the proportion of energy that was being purchased in advance by the Council over the coming years, with it being noted that the aim was to strike the correct balance in order to spread the risk created by the current volatile market. Also in response to an enquiry, the Board noted that energy was purchased for the Council as a whole, and therefore there was no risk in terms of an uncoordinated approach being taken across the Authority.
With regard to a Member’s comments around the Council’s approach towards developing greater resilience in this area and as part of that, the actions being taken by the Authority to generate its own energy, the Board noted several areas where work was being progressed which included investment being made to reduce reliance on energy usage, the development of energy generation schemes within the city and also investment in renewables external to the Council.
It was noted that dialogue on the issue of energy costs and the potential implications it could have across the sector had begun at a national level and would continue. It was undertaken that Members would be kept informed of progress made in this area.
(a) That the contents of the submitted report (including the supplementary information provided in the form of an addendum presenting updated information with regard to energy purchasing), together with the budget pressures and risks resulting from the recent significant increases in global energy prices, be noted;
(b) That the proposals for a rolling four year forward purchasing strategy for gas and electricity, guided by external market advice, based on the following approach, be approved:-
· 85% of the Council’s requirements to be purchased in advance;
· up to 65% of the Council’s requirements to be secured through longer-term trades (i.e. between 24 to 48 months in advance of when the energy is required);
· observing the principles, as set out in paragraph 31 of the submitted report.
Reason Key: Financial Impact>£500K;
Portfolio Holder: Cllr Debra Coupar, Executive Member (Resources)
Other reasons / organisations consulted
Officers are seeking external technical advice on the proposals.
External technical advisors/energy supplier.
Contact: Polly Cook, Chief Officer Sustainable Energy and Air Quality 01133785845 Email: email@example.com.
Report author: Polly Cook
Publication date: 22/03/2022
Date of decision: 16/03/2022
Decided at meeting: 16/03/2022 - Executive Board
Effective from: 26/03/2022