Transcript NEPO Slide Template

Stockton BC Corporate and Social
Inclusion Select Committee
Ian Taylor
NEPO Director
www.nepoportal.org
NEPO
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The North East Procurement Organisation (NEPO) was established in 1976 as
a professional buying organisation to aggregate demand, lead on joint
contracting and pool purchasing knowledge and expertise.
NEPO is governed by a Joint Committee comprising of members from the 12
North East Local Authorities.
NEPO has recently expanded its remit to deliver collaborative procurement in all
major areas of external expenditure including Social Care and Construction.
NEPO have developed leading edge category management processes and
commissioned category management training across the region.
NEPO’s objectives are to undertake Collaborative Procurement to:
Save money
Develop competitive regional suppliers
Enhance procurement capability
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NEPO Energy Procurement
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NEPO has been responsible for procuring the early 1990’s.
Specialist resource dedicated to managing energy.
NEPO are able to access contract options that would be unavailable to
individual customers.
The contracts aggregate volumes to provide flexible, risk-managed energy
procurement with robust contract management, performance and service
levels.
NEPO’s Gas and Electricity contracts are Pan Government approved.
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NEPO Energy Procurement
Gas Contract commenced April 2011
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Annual volumes 30M Therms (Stockton 2.8M)
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Annual value £26.9m (Stockton £2.5M)
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Current supplier Corona
Electricity Contract commenced April 2009
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Annual volume 546Gwh (Stockton 33 Gwh)
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Annual Value £49m (Stockton £3M)
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Current supplier Npower
Also a range of ancillary contracts such as Meter Operator and Automatic
Meter Reading.
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NEPO Energy Customer Breakdown
Cestria Community Housing
City Of Newcastle
City Of Sunderland College
Cleveland Fire Brigade
Cleveland Police
Darlington Borough Council
Derwentside Homes
Durham Constabulary
East Durham Homes
Gateshead College
Gateshead M BC
Hartlepool Borough Council
Hartlepool College
Housing Hartlepool
M iddlesbrough College
M iddlesbrough Council
Tyne M etroploitan College (North Tyneside College)
North Tyneside Council
Northumbria Police
Redcar & Cleveland
Sedgefield Borough Homes
Sunderland City Council
Northumberland County Council
Durham County Council
Stockton
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Electricity Price Breakdown
NEPO Breakdown of Electricity Cost 2012
TUoS
4%
Feed in Tariff
2%
DUoS
19%
Energy
BSUoS
Tloss
Imbalance
Renewables Obligation
Management Fee
Dloss
5%
Dloss
Energy
58%
Management Fee
2%
Renewables Obligation
6%
Imbalance
1%
DUoS
TUoS
Feed in Tariff
Tloss
1%
BSUoS
2%
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Year Ahead Baseload
24/05/2012
24/01/2012
24/09/2011
24/05/2011
24/01/2011
24/09/2010
24/05/2010
24/01/2010
24/09/2009
24/05/2009
24/01/2009
24/09/2008
24/05/2008
24/01/2008
24/09/2007
24/05/2007
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24/01/2007
24/09/2006
24/05/2006
24/01/2006
24/09/2005
24/05/2005
24/01/2005
24/09/2004
24/05/2004
Price (£/MWh)
Electricity Market
Electricity Baseload Prices over the last 7 years
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Japanese Tsunami
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Season Ahead Baseload
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Flexible Energy Procurement
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It is almost impossible to obtain best price in a single contracting
decision. Traditional fixed price contracts gives 1 in 250 chance of getting
it right.
Flexible procurement allows multiple buying decisions to enable
optimisation of the purchasing portfolio in an unpredictable market. Gives
access to all markets and flexibility on when and how much energy is
purchased.
NEPO utilise live trading screens, a wealth of market data, and forecasts
to support the energy trading and buying decisions.
Direct access to traders within the suppliers.
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Fixed Price Contract
Fixed Price
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Price (£/MWh)
Flexible Purchasing
Flexible Purchasing - Purchase within Period
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Purchasing Window
Quality
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Date
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Buying and Risk Management
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NEPO have developed a Risk and Purchasing Strategy.
NEPO Energy Risk Committee which is made up of representatives from
finance, procurement and energy management. The group meet monthly
and agree the tactical execution of the strategy.
The Energy Risk Committee report into the Regional Resource Directors.
Range of systems and tools to manage the purchasing of energy.
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Savings
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Savings against the market Gas & Electricity
09/10 £13.7M (Stockton £883k)
10/11 £10.6M (Stockton £664K)
11/12 1.8M (Stockton £120k)
Saving Against Agreed Budget Electricity Only
09/10 £1.4M (Stockton £94k)
10/11 £79k (Stockton £5k)
11/12 £637K (Stockton £40K)
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Benefits for Members
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Dedicated specialist regional resource.
NEPO lead on procurement process.
Support members with the exit and implementation of contracts.
Manage contracts ensuring service levels are met, provide escalation and
resolution for more complex issues and develop supplier relationships.
Act as a source of expertise and conduit to members ton ensure they are
fully informed of market developments and best practise is shared.
Represent the region at a national level.
Members benefit from economies of scale.
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Future Developments Energy
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NEPO are currently exploring working with GPS to develop a solution for
longer term buying from sustainable sources.
This would further spread the risk of buying by directly contracting with
generators across time periods from 5-25 years. This will lock in prices
during periods of uncertainty. NEPO will look to engage regionally to
encourage generators to bid for this contract.
The current contracts allow purchasing directly from generators to be
“Sleeved” in against the current contract. This can be from contracts
entered into on behalf of a single authorities or a wider initiative as detailed
above.
NEPO are also developing a collective buying strategy for the wider
community and are currently engaging with several organisations to
develop this solution.
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