National electricity contract could save councils £5M

20 August 2008

Public bodies in Scotland could shave £5M each year off the £200M cost of buying electricity by using a single, national contract.

Scottish ministers have urged the country’s 32 local highway authorities and other large consumers of electricity to commit to use a national contract, which the Scottish Government is to put out to tender.

Scottish finance minister, John Swinney, said the national procurement of electricity would ‘minimise the impact of spiralling prices on the public sector’.

The annual electricity costs to local authorities for streetlighting in Scotland have risen from £22M in 2006/07 to £31.5M for 2008/09, a 43% increase, which has prompted councils to consider ways of saving energy.

However, many authorities are already jointly purchasing electricity, including the North of Scotland group of eight councils. Iain Gabriel, Aberdeenshire’s director of transportation, said the approach had been ‘financially successful for many years’.

The authorities have jointly bought electricity through the Office of Government Commerce for the next 15 months until the national contract is expected to start.

Procurement Scotland, which sits within the Scottish Government, intends to replicate this approach to buying energy in tranches for future consumption nationally.

Swinney claimed that, as well as providing efficiency savings, the contract could support efforts to cut greenhouse gas emissions, allowing public bodies to generate electricity using small-scale renewable energy schemes and sell it back into the grid. But it was ‘imperative that take-up of the contract is as high as possible if maximum benefits are to be delivered’.

Ian Bruce, chair of the Society of Chief Officers for Transportation in Scotland, said energy costs were expected to continue to rise, ‘placing tremendous pressure on local authority finances’. He said ‘any reduction in costs will be welcome’.

The contract, due to be placed in the Official Journal of the European Union, is planned to run from October 2009 until September 2012, with the option to extend by a further year.

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National electricity contract could save councils £5M

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