Purpose

The report sets out the
strategy for the re-procurement of electricity and gas supplies for
Croydon Council.
 
In order to align with this
strategy, the report also seeks approval to urgently extend the
Council’s Npower contract from January 1st 2026 to September
31st 2026. Failure to do so will result in the Council paying out
of contract rates which will result a substantial increase
(c£600k pcm). The report will
also seek permission to extend it’s gas supply contract from April
1st 2026 – 31st September to align with the
strategy as set out in the report.
 
This decision, to be taken by
the Corporate Director of Resources, is to extend the
Council’s utility contracts as described above. The decision
on the strategy will be taken separately at a later
date.
 

Content

To agree to an extension by way
of variation of the current contract called off from the Laser
framework for electricity with Npower for 9 months from
1st January 2026 – 30th September 2026)
at an estimated value of £3,640k (please see appendix 1
for value calculation).
 
To agree to an extension by way
of variation of the current contract for gas with Corona for 6
months (from 1st April 2026-30th September
2026) at an estimated value of £713k (please see appendix
2 for value calculation).
 
 

Reasons for the decision

Securing
a 9-month electric contract extension, securing
a 10% reduction in costs against
our previous arrangements.  
 
Securing
a 6-month gas contract extension takes
advantage of the current low market prices and aligns our
contract end dates with our electric contract, as well as entry
into the October procurement basket.  
 
The use of flexible wholesale
framework contracts manages the price volatility of energy markets
by purchasing forward demand for energy at different
times, and in different amounts according to market
conditions. Lasers October 26 PIA basket is their largest
volume purchasing option – meaning Laser
can forward purchase energy for next year during the
Mar-Oct 26 period. The PIA flexible wholesale contracts
offered by LASER are recommended as these have been developed
through collaborative working with London boroughs. The frameworks
allow direct award to suppliers who score the highest in the
evaluation criteria which is the highest priority for
the Council. 
 
Using the Procurement Only
Service Option (POSO) with Laser costs £34k a year,
and we are also paying
Concept Energy £25k to maintain a
database of our bills. Moving to the fully managed bureau service
with Laser will position us in the best way to resolve
ongoing and future supplier issues, and ensure our
utilities are managed as effectively as possible. Laser will
provide all the services we receive through Concept, but
with the addition of a direct supplier relationship, ensuring
queries are resolved in a timely manner. We will
pay Laser directly, and have a dedicated account manager,
as opposed to dealing with the individual gas and electric
suppliers.  
 

Alternative options considered

The options for securing
supplies of electricity and gas are set out in the table
below. 
 

Option 

Description 

Do nothing 

This option is not recommended
as it would result in the incumbent suppliers billing on ‘out
of contract’ rates which are significantly higher than
contract rates. 

LBC lets own
contracts 

The council could issue its own
tenders to secure new supply contracts. This option is
not recommended as the council has insufficient volume of demand in
its own portfolio to buy via a flexible wholesale strategy. In
addition, the council would most likely face ‘take or
pay’ cost penalties when the portfolio volume decreases due
to estate disposals. 

Access other public sector
energy frameworks 

CCS and regionally based
public buying organisations offer frameworks with similar wholesale
purchasing strategies to LASER. LEP had previously produced
analyses of CCS and LASER wholesale price outcomes (as London
boroughs purchase via both organisations). When
comparing over rolling 3-year periods, both organisations
were achieving similar levels of savings below market average
prices.  CCS (and other buying organisations) only
offer single supplier frameworks (where the top scoring
provider across the cost/quality criteria is the only provider
for that category). 

Access LASER energy
framework 

LASER
was established as an energy buying organisation for
London and South East authorities.
It maintains strong links and working relationships with
the various cross-borough energy groups (such as the London
Boroughs Energy Group and London Council’s energy
projects). The new energy frameworks were developed according
to the feedback and requirements of LASER’s
existing client base (including the council).