Published date: 21 August 2019
NHS Property Services signs new energy broker
As utility prices continue to rise and people’s values change to recognise their environmental impact, NHS Property Services’ Energy and Environment team seek to fulfil NHSPS’ vision by driving cost efficiency, reducing the environmental impact of its operations and ensuring environmental compliance.
Over the last few months the Energy and Environment team and Procurement have been undertaking an open market tender for a new energy broker. Inspired Energy was confirmed as the new broker on a 3+2 year contract for our collective electricity and gas contracts as of the 1st April 2020. At a spend of approximately £40m a year (80% of our total Utilities spend), this is an important step in ensuring we get the best price in the market for our utilities and also securing our long term price certainty.
Inspired are the top ranked broker in the market by independent consultant Cornwall Insight and will have direct responsibility for trading the commodity price (p/kWh) that we see in our invoices. They will also have responsibility for selecting our new suppliers that will not only determine the non-commodity price (line charges, taxes, etc), but also how we are billed and what meters will be installed over the coming years.
As of the 1st April 2019, the Climate Change Levy (CCL) was increased to compensate for the stopping of the Carbon Reduction Commitment (CRC) payments. NHS Property Services did not have to comply with the CRC, so the increase in the CCL could have resulted in an increase of 33% to some site’s non-commodity costs. Therefore, the decision was made last year to undertake a one year trial of purchasing energy under a flexible trading model. This allow us to pre-purchase energy, establish a maximum commodity price we will pay and sell any energy back to the market if the price drops. This has resulted in offsetting the expected price rise by £3.5m this year. With the ability to buy energy upwards of four years into the future, the decision was made to undertake the above procurement exercise and lock in a long term energy broker. Supplier selection will take place over the next couple of months, allowing Inspired to start trading our consumption several months before we start using it on the 1 April 2020.
Cameron Hawkins, Head of Energy and Environment, NHS Property Services, said “managing energy costs is a key challenge for us, with both domestic and international pressures increasing commodity and non-commodity costs into the foreseeable future. Establishing a long term strategy will give our tenants access to the best prices in the market and to have flexibility in how we can incorporate renewable energy into our generation mix.
