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RESOLVED:
 
To increase the PAYG price per kWh
charged by the Electric Vehicle Charge Point Operator (CPO), Zest
Eco Ltd as per Table 1 in Appendix 2 ‘Proposed tariff
increase’. The variation will take effect from 1 January 2024
until 31 December 2034.
 
That following the receipt by the Council
of grant funding from the Local Electric Vehicle Infrastructure
(LEVI) fund pilot scheme, award to Zest Eco Limited a contract for
the delivery of 70 fast chargers and dedicated EV Car Club bays for
a maximum value of five hundred thousand pounds
(£500,000).
 
 
Reason(s) For Decision
 
1. 
This report recommends
Cabinet Procurement and insourcing Committee to agree to increase
the PAYG price per kWh charged by the Electric Vehicle Charge Point
Operator, Zest Eco Ltd.
 
2. 
The price would be
increased from the previously proposed PAYG price per kWh included
in the cost submission from Zest in response to the procurement
exercise, carried out between June 2021 and May 2022, to deliver
and operate a network of Electric Vehicle Charging Points within
the borough. (See Appendix 1 for cost submission). 
 
3. 
The variation will
take effect from 1 January 2024 until 31 December 2034.
 
4. 
After 31 December
2034, the PAYG price will be reviewed by the Council and Zest and a
new recommendation on price will be agreed in line with the
existing contract terms and conditions.
 
5. 
The setting of a new
PAYG price will be consistent with the terms and conditions of the
concessionaire contract. 
 
6. 
As described in the
Cabinet Member’s introduction, the unforeseen war in Ukraine
and energy price shocks have redefined the wholesale market for
energy and fundamentally affected the operating dynamics for
Electric Vehicle Charge Point Operators (CPOs).
 
7. 
Tender bids received
in March 2022 required a maximum PAYG price submission that would
be maintained for 2 years and then rise based on CPI +3% each year.
The Contracting service accepts that there have been fundamental
changes to the market and wholesale energy prices that are likely
to make the original bids unviable for the CPOs
 
8. 
Resetting the starting
price per kilowatt  hour charged to the
customer would allow the approved charge point operators to adjust
to the current market conditions to ensure business viability and
be able to deliver the agreed project outcomes and maintain the
assets and service throughout the lifetime of the concession
contract.
 
9. 
EV charge point
operator Zest has completed the Council’s ‘Variation to
PAYG price’ form and provided the requested evidence in
support of the request to vary the price per kWh included in the
original cost submission. These forms are in Appendix 4
.
 
10. 
EV charge point
operator Zest has provided recent benchmarking to underpin their
proposed starting price per kilowatt hour (see Appendix 3 for
benchmarking). 
 
11. 
The Council’s
contract management mechanisms will be used as a way to flag any
discrepancies in the current market price and the price per kWh
charged to the customer if it is deemed that the CPO has not
responded sufficiently to the change in the wholesale price for
energy in moderating their tariff. 
 
12. 
In March 2022 the
Council was awarded Five Hundred Thousand Pounds, £500k
through the Local Electric Vehicle Infrastructure (LEVI) fund pilot
scheme. The funding was awarded for the Council's bid proposal to
use the money to fund otherwise less profitable use cases for EV
charging.
 
13. 
The proposal is to
install 70 on-street fast charging sockets, 35 of which will be
dedicated to EV car clubs and 35 of which will be available for
public access charging. This infrastructure will support car clubs
in Hackney move to electric vehicles and ensure an equitable
transition to electric motorised travel for all Hackney
residents.
 
14. 
The proposal is in
line with the Council’s objective to reduce vehicle ownership
and miles driven whilst rapidly facilitating the transition to
electric vehicles and improving local air quality. 
 
15. 
The pilot project will
be delivered under the existing contract agreed with Zest Eco Ltd
to install and maintain fast charge points because they meet all
the requirements as set out in the tender.
 
16. 
The existing contract
with Zest contains a provision for the Council to receive an
increased share of the revenue from the operation of the charge
points in response to additional external grant funding, (or other
income sources) secured for the delivery of public EV charging
infrastructure. 
 
17. 
This is detailed in
paragraph 8.9, section 8 on ‘partnership working.’ of
the tender specification Appendix 1 which reads that the CPO will
‘actively bid for the external funding available for Local
Authorities, to contribute to the partnership financially in return
for the lower tariff rates available to residents, where
feasible.’
 
18. 
The £500k LEVI
pilot scheme funding meets this criteria and, as such, Zest has
agreed to increase the share of the revenue to the Council from 10%
to 12.5%.  The additional revenue share
received by the Council will be reinvested into sustainable
transport projects.
 
Alternative Options (Considered and
Rejected)
 
Option 1: Do Nothing
Doing nothing will result in the Electric Vehicle Charge
point operator experiencing a financial loss. If the operators go
out of business then the success of the EV charging scheme and
ambitious targets for the deployment of EVCPs across the borough
will be at risk and could impact on the Council’s
reputation
 
Option 2: Reject the request to vary the
PAYG price per kWh
Rejecting the changes recommended in the report will result
in the outcome described in 6.1.1
Option 3: Reject the award of a contract under a
Single Tender Award mechanism to Zest Eco Ltd to deliver the EV
project which has been awarded grant funding of £500k from
the Local Electric Vehicle Infrastructure (LEVI) fund.
 
Rejecting the award of contract to Zest to deliver this
work would mean that the project objectives are not delivered and
the benefits to residents are not realised. 
 
Furthermore, it would not be possible to deliver the
project with the same, or similar value to the Council by awarding
the work to another CPO. The Council is able to benefit from the
scale of the existing contract with Zest to leverage additional
returns as noted in 3.5 that Zest has agreed to increase the profit
share received by the Council from 10% to 12.5% in response to the
additional external funding secured from the LEVI pilot
fund.