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London Energy Project Achievements

LEP was originally established in 2006 under central government funding as an improvement and efficiency project. In 2009, its innovative introduction of aggregated, flexible, risk managed energy procurement (Flex Contracts) to London’s public sector brought about a significant change and is now mainstreamed. Since 2012, LEP is funded through direct authority contributions, operating on a cost-recovery only basis under collective governance.

LEP has been recognised for its contribution to public authority energy and carbon management through sector awards including:

  • 2013 Finalist, GO Awards – Best Procurement Initiative category
     
  • 2011 Finalist, CIPS Supply Management Awards – Best Supplier Relationship category
     
  • 2009 Winner, GO Awards – Best Procurement Initiative category

We’ve achieved a great deal already, but sustained pressure on authority finances beyond 2015 means we have further to go in our work with our stakeholders and partners to innovate and to deliver even better value for money to realise Our Vision for energy and carbon management in London authorities.

Rising Energy/Carbon related Costs

The UK public sector spends around £3.8bn per year on energy, while energy costs London’s public sector c.£350m p.a. with carbon costing a further £15m p.a. Volatile commodity costs (gas, electricity), increasing infrastructure costs and security of supply issues make secure, value for money energy supplies a strategic business issue for every public authority. Energy is a supply category that presents complex strategic and highly technical operational management challenges:

  • Approx 50% of supplied electricity and 75% of supplied gas costs are regulated by government
     
  • There is very little  choice between large/powerful suppliers, delivering varying levels of service
     
  • Administration costs are high with close to 100,000 electricity and gas meters to manage across London
     
  • Mandatory carbon regulations are burdensome and expensive.

Benefits of Aggregating Buying Power

By aggregating Participating Authorities’ buying power, LEP is able to influence the supply market to get products/services that better meet business requirements and also save money through back-office efficiency. As a result of co-operation and working towards a pan London Category Strategy, LEP Participating Authorities have accrued £43.4m in benefits over four years.

  • Approx. £29m was saved/avoided in energy supply costs from improved risk managed energy supply contracts verified through a robust, independent reviews and appraisal.
     
  • £100k savings achieved through joint procurement of a CRC Annual Audit service. Audits were less than 50% of the price individual authorities paid in the preceding year, 350 man days of officer time/time across participating authorities was saved; and additional benefits such as free training, private online forum and online tools were also delivered.
     
  • 20% reduction in back-office costs resulted from LEP’s request on changes to an energy supplier’s invoicing system. The supplier acknowledged it saved them money too.

LEP successfully lobbied for changes to CRC regulation avoiding £8m carbon allowances across London (£663k p.a. confirmed by a single borough).

  • LEP successfully challenged the treatment of street lighting supplies by the Distribution Network Operator avoiding £4m (£50k p.a. per authority).
     
  • Escalation to LEP resolved a contractual dispute with a supplier achieving a £75k refund for a single school.

We actively listen to our participating authorities’ business requirements, experiences of energy-related products and services, and experiences of our support. In a recent survey of 24 authorities, 100% of officers said the knowledge, expertise and quality of LEP support services are good. We aim to keep it that way.

Thanks for your support

LEP would like to thank everyone involved in our successful delivery to date, including colleagues from the energy, finance, procurement, environment, estates and asset management sectors in our Participating Authorities, the organisations involved in the Pan Government Energy Project and the two Central Purchasing Bodies that provide energy procurement services to London: the Crown Commercial Service and LASER.

We believe there is still much to do and much to achieve and would like to extend our community to include authorities in the Home Counties.  To learn more about our work, value for money initiatives and how to be become an LEP Participating Authority, contact us at: LondonEnergyProject@haringey.gov.uk or call 020 8489 1102.