On the 4th March 2015, Camden Council has sent a Notice to enter into qualifying Long Term Agreements. The original document can be found below:
London Borough of Camden
Camden Town Hall
Date: 4th March 2015
Contract Ref: 14/214
Re: Flat XX Goldthorpe.Camden Street,London,NW1
Qualifying long term agreement for Communal Electricity Supplies and Bulk Gas Supplies
This letter and the Notice of Intention (see overleaf), relate to Camden’s costs for supply of communal gas and electricity for the following types of supply: electricity metered supplies and bulk gas supplies. These landlord’s supplies serve housing properties, for example, lighting in communal hallways and gas supplies to communal heating systems.
Following a procurement process, LASER (Kent County Council) has been appointed to buy the Council’s gas and electricity. This was approved by the Strategic Procurement Board on 5th January 2015.
They will buy the Council’s energy on the wholesale market through their competitively tendered OJEU (official journal of the European Union) compliant framework contracts with energy suppliers. Currently they buy energy on behalf of 160 public sector organisations.
Although the existing supply contracts are not due to end until 30th September 2016, by entering into new supply contracts early (by April 2015), the buying window is extended to enable LASER to use their flexible buying approach to buy when the wholesale energy market is favourable, to minimise energy purchases during peaks in the market and to aggregate our volumes with other public sector organisations in order to secure price advantages. The buying window is likely to open summer 2015 for supply start 1st October 2016 and will run for a period of up to 4 years.
The current contract with LASER is monitored independently by the London Energy Project (LEP). Having completed a series of technical assessments, LEP were able to confirm that the energy commodity prices achieved by LASER up to September 2014 were good and have consistently delivered value for money over a period of time.
The nature of the energy market, means that it is not possible to meet all the consultation requirements under the Landlord and Tenant Act 1985 Section 20ZA (1) and in April 2011, Camden sought and was awarded Dispensation by the Leasehold Valuation Tribunal (LVT) from the consultation process for 5 years commencing from 30th June 2011. If you wish to view the full LVT decision you can do so by checking the following website: http://www.lease-advice.org/lvtdecisions/ and by searching for LON/OOAG/LDC/2010/0104.
Should you have any questions regarding this letter or the enclosed Notice of Intention, please do not hesitate to contact Leaseholder Services using the contact details above.
Assistant Director HASC
NOTICE OF INTENTION TO ENTER INTO A LONG TERM AGREEMENT FOR WHICH A PUBLIC NOTICE IS REQUIRED I- Section 151 Commonhold and Leasehold Reform Act 2002 – Schedule 2
To all leaseholders of the London Borough of Camden and all recognised tenants’ associations.
Lease Address: Flat ‘,Goldthorpe,Camden Street,London,NW1
It is the intention of London Borough of Camden to enter into 2 long term agreements with Procurement Service Providers (agents) for electricity supplies and bulk gas suppli in order to obtain competitive prices for landlord gas and electricity supplies. This contract will affect properties receiving landlord electricity supply and communal gas supplies (including heating, hot water and cooking) across the borough of Camden.
This notice concerns the Gas and Electricity supply to the above leasehold property.
1. This qualifying long term agreement is with LASER (Kent County Council) to procure flexible framework supply contracts from energy suppliers to enable access to the wholesale energy markets for the purchase of gas and electricity. The existing Leasehold Valuation Tribunal decision permits Camden to procure energy suppliers in this way until 30th June 2016.
The flexible supply contracts will meet current Best Practice Guidance recommended by the London Energy Project (LEP). LEP aims to promote best practice energy procurement in the public sector. This contract will enable Camden to operate cost effective risk managed energy supply agreements.
2. In this instance Camden will not be inviting leaseholders and recognised
tenants’ associations to nominate a firm. This is because the total value of this agreement exceeds the notional value of the European Union procurement rules.
3. We invite you to make written observations by sending them to London Borough of Camden, Camden Town Hall, Judd Street, London, WC1H 9JE, or by emailing: firstname.lastname@example.org quoting 14/214 and xxxx, in the subject line.
4. The Council considers it necessary to enter into the Agreement for the following reasons. As your landlord, the Council has to meet certain obligations under your lease, in particular with regards to the supply of gas and electricity. In order to provide these services, the Council needs to ensure that suitable contracts are in place.
Observations must be made within the consultation period of 30 days from the date of this notice. The consultation period will end on 8th April 2015 and all observations need to be received by this date.
Please note that the Leasehold Valuation Tribunal have already awarded Camden Dispensation from the consultation process for 5 years commencing from 30th June 2011
6. Camden estimates the total value of the agreement with LASER (Kent County Council) to be £467,599 over the proposed 4 year supply period (average cost £116,900 per annum). The LASER service will buy and manage gas and electricity supplies for housing, depots, offices, libraries, schools etc. valued at an estimated £15 million per annum.
7. Leaseholders individual estimated and actual contributions toward communal electrical and gas supplies are invoiced in their annual service charges.
Signed on behalf of
London Borough of Camden:
Assistant Director HASC
Qualifying Long Term Agreements for Communal Electricity Supplies and Bulk Gas Supplies – Frequently Asked Questions:
1. Will this affect my own electricity supply within my property?
The Notice.of Intention sent to you concerns the communal electricity supply, and not the individual supplies to residents’ properties. The supply to your property will continue to be your responsibility.
2. During the four year contract is the cost of the fuel fixed? Should the price of fuel go down will leaseholders see it in their service charges?
A consortium can make several purchases over a year thereby reducing risk. Such an approach is deemed to be best practice. Therefore as the consortium will make several fuel purchases over each year if the energy market fuel costs reduce the Council and leaseholders should still benefit from this.
3. What processes are in place to prevent erroneous transactions from being made?
The current buying process is managed for aggregated customers’ energy under a procurement and risk strategy which is scrutinised by a Governance Panel. This Panel is made up of Kent County Council officers, purchasing managers, customer representation, and an independent energy consultant.
They meet quarterly to review purchases undertaken and consider amendments to strategy in the light of changing market conditions. All purchases are made within these ‘rules’ supported by specialised energy trading and monitoring software and energy traders. Every purchase is recorded and audited and telephone calls recorded. The buying team know how much energy has already been bought and what is left to buy and what needs to be bought by certain times to ensure that no out of contract rates are applied. No one can guarantee to ‘beat the market’ however, this approach has been independently reviewed and found to reflect Best Practice.
Provided this model is adhered to, which is why it is regularly reviewed by the Governance Panel, risk is managed and exposure to the volatility of the wholesale energy market is minimised.