The Forum was provided with an oral update on the impact of increases to the Local Authority’s gas and electricity contracts.  The Group Manager Energy (Procurement & Integrated Commissioning) reported that most but bot all schools and academies in the city were using the Local Authority energy supply framework for gas and electricity need.  Renewal dates for energy supplies would vary for those organisations who sought supply from elsewhere, however the basic principles to be outlined would  be applicable to all. As had been well publicised, energy prices were set to significantly increase.  The Local Authority’s electricity contract had been  replaced last year on an October to September contract whereas the gas contract  was aligned with the standard financial year.  The renewal of the electricity contract  had involved an unprecedented price increase of 87% average.  As the gas contract was due for imminent renewal, it would then be subject to prevailing market forces and was likely to involve a six-fold increase.  In addition, the Authority’s current gas supplier was Gazprom with links to the Russian parent company.  Therefore on the advice of the Secretary of State, the Council would be seeking an alternative supplier  at the end of the contract. He however gave assurance that during the contract with Gazprom, very little to no supply of energy came directly from Russia supplies.  Options had been thoroughly explored and as a result the Authority would be moving to Corona Energy (an earlier supplier prior to Gazprom), the nature of which would be a 24 month flexible contract in light of the significant level of uncertainty around pricing.

The Head of Corporate Procurement added that in the current extremely hostile market, the Authority’s chosen supplier was best viewed as a ‘least worst’ option.  He also referred to ongoing dialogue at  Local Government Association,  DfE and Cabinet Office level about gas markets pressures, given that price-capping was only in place for domestic contracts.  He urged schools to be extremely cautious where pricing information was concerned as recent information had come to light about unscrupulous energy brokers seeking to exploit concerns over market forces by providing false pricing information to their own advantage.  Schools were therefore invited to approach  the Local Authority for advice and  guidance where those concerns were at play.

There was a discussion about actions to mitigate the impact, the Forum  noted that currently there was no planned large-scale intervention at this stage although the Government had indicated that it would keep the issue under review.  The Directorate Finance Lead - Children and Schools added that the Supplementary Grant  discussed under an earlier agenda item  had been provided to include support schools with rising energy costs  although it was extremely unlikely to accommodate the full cost of those increases, therefore a prudent approach was required in terms of budgeting. She added that  schools and academies were now able to apply for Salix loans for energy efficiency schemes and that further information on this would be circulated to schools.

A member commented that give the impact of the increase in National Insurance contributions, the Supplementary Grant was extremely unlikely to  provide adequate support to schools in their management of rising energy costs.  The Director of Education added the impact of rising  costs would also impact on the cost of third party supply services to schools.  She indicated that the wide ranging impact of those price increases on schools should form the basis  of representations to the DfE by the Local Authority and at individual school level.

The Directorate Finance Lead - Children and Schools advised that the Forum would be kept informed on the issue.

Decision

To note the update.