05 March 2007 | Antony Barton
London local authorities should review their energy procurement strategies, according to the Regional Centres of Excellence.
The Local Government Energy Procurement Action Plan aims to cut London councils' annual £160 million energy bill. It asks councils to conduct a self-assessment of their energy strategy, allowing for progress to be benchmarked annually.
The London Centre of Excellence, which funded the plan, said it could lead to a 10 per cent reduction in energy costs. It is encouraging councils to seek professional help from organisations that understand the energy market and use existing deals provided by local government buying organisations.
Haringey Council has implemented the action plan over the past year and predicts a saving of £320,000 on its £6 million a year energy bill. Michael Wood, its head of procurement, said: "What started out as a seed corn project in 2004, when energy prices jumped by 50 per cent, has transformed into a national project. The resulting action plan gives tried and tested steps to help reduce inherent risks when buying energy in today's volatile markets and improve energy billing and administration."
Susie Owen, action plan project manager at Haringey, told supplymanagement.com that a move from a traditional fixed price tender to a flexible procurement method has enabled some of the savings. Other measures include a move to electronic billing and validation.
She added that it was difficult to benchmark energy prices with other authorities because of differing portfolios, so efficiency gains would be determined by considering internal cost reductions.