1. London Energy Project’s 10 year programme to Energise the future of London’s energy landscape Barry Phelps, Head of Procurement and Joe Baker, Head of Carbon Management, Haringey Council 25 June 2019

2. Who is LEP? 74 LEP Member Authorities 2018 - 2020
Hillingdon
Harrow
Ealing
Brent
Hounslow
Barnet
Enfield
Haringey
Waltham
Forest
Richmond
Kingston
Wandsworth
Merton
Sutton
Croydon
Bromley
Lewisham
Lambeth
Southwark
Greenwich
Bexley
Redbridge
Havering
Barking & Dagenham
Newham
Tower
Hamlets
Camden
Islington
Hackney
City
H’smith & Fulham
Ken & Chels
Westminster
Including
London-wide organisations - London Fire Brigade, Metropolitan Police, Transport for London
Regional Authorities - Hertfordshire CC, Oxfordshire CC, Reading Borough Council, Southampton City Council, Surrey CC, Worcestershire CC
37 NHS London Procurement Partnership (and South) members

3. LEP Group Profile: Strength in Numbers
45,000
Electricity supply points across London’s public authorities
3.5TWh
Electricity consumed annually
£750m
London authorities’ annual spend on energy (electricity/gas)
Potentially Zero CO2 emissions
10,000
gas supply points across London’s public authorities
5.5TWh
Gas consumed annually

4. The issues to address
Individual low contract value (only a few million) could not secure value through bulk buying
Contract design was poor
Contract management was weak
Issues not properly resolved by suppliers
Expensive, long, and risky procurement exercises
Common problems - Knowledge not shared between LAs
Poor prices from suppliers
Energy projects design being replicated across the LAs with little design and delivery sharing knowledge
Suppliers wanted standardisation of approach
Insufficient evidence as to what we collectively could achieve and deliver

5. 2018-2020 Working together toward LEP Goals
keeping energy & water affordable
The London Energy Project
Working together toward LEP Goals
Stronger together
(Collaboration)
combined expenditure
improved products and services
innovative commercial models/tech.
resilience and business continuity
Cheaper
(Savings)
contain costs
reduce price/ contractual risks
better terms and conditions
appropriate price risk management options/ improved commercial outcomes
Better
(Commercial & Innovative)
products, services, delivery models that meet our business requirements
almost bespoke service specifications, no additional costs
Faster
(Efficiencies)
maintain aggregation/ collaboration
reduce significant back-office costs
respond to new regulatory requirements on a once for all basis

6. London Energy Project Trajectory 2007-2018
2008
LEP launches Energy Value for Money Assessment
LEP launched as a change management programme, funded by Capital Ambition
London spends £300m pa on energy
London spends £350m pa on energy
London spends £400m pa on energy
Water market deregulation
London authorities managing utilities in isolation
LEP develops Water SOR/ conducts pre-market engagement with water market
50% London authorities adopt Energy Flex Contracts
LEP joint procurement CRC Audit Service Framework
LEP Energy Annual Achieved Prices Benchmark launched
Fixed price energy contracts the norm
35 authorities renew their LEP MOA (mixed community)
First LEP Energy Statement of Requirements (SOR) developed
LEP wins national GO Award for Best Procurement Initiative
Capital Ambition closes
LEP joint procurement water & ancillary services call-off contract
Evidence Gathering – threat to established ways of working
100% LEP authorities adopt Energy Flex Contracts
35 authorities commit to joint MOA and direct funding of LEP work programme
Enhanced LEP Energy Annual Achieved Prices Benchmark launched
CRC EES Phase 1 launched
Energy Flex Contracts negotiated with CPBs and introduced to London authorities
Updated LEP Energy SOR/ conducts pre-market engagement with energy market
CRC Phase 2 begins
National RIEP funding LEP’s first CRC training & guidance service
CIPS Supply Management Awards Finalist SRM
National GO Awards Finalist BPI

7. LEP Intelligent Client Value, Resource Efficiency, Monitoring
Category and Supplier Management
Category Development - new energy and water supply contracts
Shared Supplier / Contract Management - energy and water suppliers and service providers
Pan-LEP Procurement Options Appraisal and Statement of Business / Technical Requirements
Better Use of Resources
Street Lighting VfM Review
Bill Validation Standards, & Bureau Practice
Energy Management Software Improvement
Improved Data Quality & Management Information
Commercial Options Demand Reduction & Generation
Utilities Procurement Value for Money
Benchmarking - Annual Achieved Price Assessment traded energy prices
Aggregation Benefits Analysis - Maximise
Authority-specific VfM contracting support
Leadership & Representation
Strategic Supply Market Influence
Senior Managerial Guidance /Business Continuity
Government/Regulator
lobby and represent our sector’s interests
Carbon Compliance & Environmental Improvement
Carbon Compliance Support and Audit Service
Legislation/Regulatory Updates and impact plan
Emerging Technology & Industry Innovation Updates & Implementation Guidance
Webinars/ Teleconferences
Specialist Support to Build Capable and Agile Workforce
Workshops, Training
Peer Focus Groups, Development Opportunities
Support for Authority Business Programmes

8. Utilities – Price risk and budget management
Commodity prices are volatile
Managing price risk supports effective budget management
New risk models needed to deal with short term supply & price volatility of wind, solar etc.
Cost could go up by ~ 25% in 3 years without action
Cashable savings impossible on price alone
Government pass-through costs
Cost of carbon
Brexit
Underlying non-energy costs are rising and need action
Infrastructure
Demand response
New generation

9. Utilities – Price rises

10. We’ve learned that buying off the shelf doesn’t serve us
Our 10 years experience tells us that:
buying the standard market offering doesn’t reduce overall cost and deliver the savings, efficiencies, sustainability, community benefit, budget control and VfM we want and need
all authorities can achieve greater benefits more quickly and with reduced risk than if acting alone or in small groups, now and in future
Simplify & consolidate supply chain
Suppliers deliver what we need
Managing budget and energy price
Local policies and priorities
More control, easy to manage
Fit our business practices, operational efficiencies
Retain aggregation, suitable risk products, ability to sell
Local apprentices, SME, green energy, low carbon, EV roll out
LEP-managed contracts designed to offer different route to market and price risk products with enhanced specification to typical CPB contracts

11. Seeking a Big Prize!
Pan-LEP energy and water procurement is a big opportunity, which can shape markets
Suitable commercial terms, risk products, suppliers, control of supply chain
Able to trade electricity, develop local apprentices, SMEs into supply chain, low carbon, London Living Wage, education packs, demand reduction, etc
Water Resource?
Pollution?
Renewable?
Local Economy?
Local Community?
Education?
©line.do

12. LEP working for members
Long-term commitment to shared strategy
Project leadership/ facilitation by a category-expert team
Common goal / Formal compact (MoA)
Dedicated Market Intelligence / Market-shaping remit
Strategic impact & operational benefits independently verified throughout the Programme
Proven approach to market engagement so the contracts, products and services make commercial sense for all users
Proven approach to harmonising public sector customer requirements
Customer (member)/ Supplier upskilling

13. Benefits
Our long-term approach has helped member authorities realise £60m savings - avoided costs. 
Lobbying and getting regulations changed or simplified
Compliance and Reporting – Best Practice
Back-Office transactions
Resolving contractual disputes and contracts that meet needs
Procurement costs and efficiencies, Training, Contract Management

14. London Energy Project’s 10 year programme to Energise the future of London’s energy landscape Barry Phelps, Head of Procurement and Joe Baker, Head of Carbon Management, Haringey Council 25 June 2019