Energy supply contract – new Lambeth boroughwide consultation

On the 15 January 2024, the consultation process started to enter a new contract for the supply of electricity and gas on Lambeth Housing Estates and buildings. The contract will be 4 years with no option to extend.

Find out about the consultation here:

Residents are invited to send in their observations on the contract in the following ways:

  • Online via e-form: bit.ly/S20eform
  • Email: S20Consultation@lambeth.gov.uk
  • Write to: S20 CONSULTATION, London Borough of Lambeth, PO Box 80771, London, SW2 9QQ.

    Include reference ENERGY_SUPPLY_CONTRACT and make it clear you are sending in a Section 20 Observation.

PRERA has submitted the following questions, and received the responses underneath:

  1. Why is the new contract proposed 4 years in length given the volatile nature of the energy market and current high prices? Residents could be locked in to paying high prices after potential a potential drop in the future.

The framework contracts the council is proposing to enter into run for a duration of 4 years. Whilst the gas and electricity suppliers will remain the same for the framework duration – prices are renewed each year on the 1 April, with the energy requirement purchased in advance over a 12-month procurement window (each year) up to the 1 April contract start date. 

Under the arrangements, Lambeth’s energy portfolio is aggregated with that of other public bodies. This enables LASER, and not the energy suppliers, to purchase energy requirements direct from the wholesale market to access reduced traded prices. Purchasing in a risk managed manner over a 12-month period enables the Council to benefit from any downward movements in the wholesale energy market. This procurement method was adopted by the council to mitigate the risk of fixing all of the council’s fuel costs on a single day at a potentially unfavourable rate.  The energy prices achieved by LASER are then combined with the energy supplier’s costs to serve and energy industry charges to determine the fixed rate for each Council supply point for a 12-month period.

  1. What kind of tariff is being proposed? As per the point above, entering into a fixed contract at current prices for 4 years could mean residents are locked into high prices for a considerable period of time.

Please see the response to Q1.

  1. What consideration has been made into procuring renewable energy?

The Council through its current arrangements with LASER is supplied 100% Renewable Energy Guarantee Origin (REGO) traceable green electricity.  The proposed new contracts will offer the Council several options in relation to the procurement of renewable energy moving forward.

  1. What efforts are being made to drive demand reduction across the area covered by the contract?

The arrangements will support a number of back-office efficiencies which include electronic consolidated billing to facilitate efficient payment, energy data retention and payment allocation, the availability of supplier online portals for query tracking and resolution, copy invoice availability and reporting.  The data held is central in enabling the Council to reduce and report against its Carbon emission targets. 

The Council’s initiatives in relation to Climate Change and Sustainability can be viewed here

  1. Some properties with community heating are prevented from full control of their energy costs as the properties do not have individual meters for heating and hot water. What steps are being taken to install meters for all individual properties where Lambeth is the freeholder in order to all residents full control of their energy use, and therefore help with demand reduction.

Lambeth may be required to install heat meters in individual properties under the heat metering and billing legislation in communal blocks and we are currently carrying out metering cost effective assessments of our stock to identify what blocks we will be required to have them installed.

  1. What consideration is being made of the carbon, social and environmental performance of the chosen supplier?

The Energy Suppliers who will be responsible for the supply and administration of the gas and electricity supplies to council sites have been appointed by LASER onto their frameworks following an Open tender process through the Find a Tender system:

Electricity: Electricity Flex 2024 – 2028 (laserenergy.org.uk)

Gas: Gas Flex 2024 – 2028 (laserenergy.org.uk)

The suppliers who tendered for the opportunity were assessed on both their Quality and Price to deliver the required services – these included criteria for Social Value and Net Zero (see response to Q4).   
 

  1. Is Lambeth part of a group purchasing scheme / public buying organisation?

LASER is a Public Buying Organisation who aggregates Lambeth’s energy requirement with that of other public bodies in its portfolio.