ESPO helps public sector buyers drive down energy costs with new electricity framework

Public sector buyers can achieve savings on their electricity prices

ESPO, the UK’s largest public sector buying organisation, has announced a four-year electricity framework (2016-2020) that will enable local authorities, central government, NHS, schools, police and fire & rescue services and other public organisations, to achieve an initial annual saving of approximately 5% on their electricity procurement costs.

In contrast to public sector buyers negotiating electricity supplies amid volatile market prices, ESPO’s new contract is based on a pre-agreed, fixed ‘supplier margin’ for the full four-year contract duration; this is a direct result of ESPO, as a large purchaser, being able to take an aggregated and risk-managed approach to negotiations with suppliers and so return greater value to customers.

ESPO’s new framework, awarded to energy supplier Total Gas and Power, will deliver overall savings of £4.7 million over the four-year period on the current framework supplier’s service costs and other associated fees, which can be passed on to ESPO’s customers on the framework.

The new framework offers a series of innovations to make energy buying process simpler and safer for public bodies’ procurement teams:

  • Contract invoice rates are fixed at the 1st October price for each of the contract’s four years but public sector buyers can sign up at any time from now onwards in readiness for the framework
  • ESPO’s agreement gives procurement departments a quick, easy-to-use and EU-compliant way to buy electricity or to switch from their existing supplier; public buyers don’t need to run a complicated and time-consuming supplier tender for a new electricity supply contract, because ESPO has already completed all necessary procurement and legal processes
  • Unlike ‘let and forget’ energy supply contracts, ESPO provides dedicated account and billing managers, to answer queries or deal with administrative aspects such as supply point administration, portfolio management and price validation
  • ESPO’s framework also gives buyers access to technical support services, including automated meter reading (AMR) and new meter connections, assisting procurement or estate managers that may be assuming responsibility for a new property estate or want to be able to audit and monitor energy costs over time.

Chosen supplier Total Gas and Power met all ESPO’s assessments in respect of financial stability, track record, experience, electricity supply licence, and technical and professional ability, before being awarded a place on the framework.

Andrew Stanford, Procurement Service Manager – Energy, ESPO, said: “ESPO has used its energy market expertise and buying power to deliver attractive savings for public procurement teams, despite energy price volatility. Our framework makes buying simpler, quicker and EU-compliant for buyers – terms and conditions are all pre-agreed under the framework and there’s advice and support throughout the contract from our dedicated account managers.”