Procurement - supply of electricity framework SP-21-052: buyer guide

Using the framework

How to use this framework agreement

Pricing

The total billing rate for each site is built up from a number of elements: the wholesale energy, a variety of pass-through costs (distribution, UK Government levies, etc.) and framework management fees. 

The supplier’s management fees make up just a few per-cent of the total cost. The rest of a bill is made up of wholesale and pass-through costs.

Scottish Procurement purchase the wholesale electricity on the futures markets up to two-and-a-half years in advance. Their flexible trading strategy smooths-out the peaks and troughs of market fluctuations while avoiding payment of the ‘risk-premium’ which would be applied to fixed rate tariffs.  Flexible purchasing is popular in the public sector as it improves budget predictability while keeping costs down.

A Risk Management Committee (RMC) dictates how much wholesale gas/electricity must be bought in advance and how much must be bought closer to consumption. This is their ‘risk management strategy’. The RMC consists of experts from energy management, finance and procurement functions from across the Scottish public sector. They meet once a quarter to receive market updates, to scrutinise Scottish Procurement’s purchase decisions and to consider whether or not their risk management strategy remains fit for purpose.

Pass-through costs are set by market regulators and the UK government and as such, neither Scottish Procurement nor the electricity supplier of gas is able to influence them. 

Scottish Procurement issue a quarterly Price Risk Guidance which includes current and forecasted average rates for meter type.

Detailed site specific billing rates are sent to all customers by EDF Energy within one month of the start of each contract year.

Framework and contract management

Scottish Procurement will manage the framework agreements at a strategic framework level. This incorporates a number of activities including the management of framework supplier performance, collating management information, coordinating feedback, undertaking quarterly business reviews, user feedback groups and supporting Framework public bodies with any issues or concerns.

Framework public bodies must manage all call-off contracts awarded at a local level and deal with day-to-day issues with a view to resolving these locally in the first instance. Scottish Procurement will act as the escalation point should local resolution prove unsuccessful.

Framework public bodies using these frameworks should request their own management information and hold regular meetings with the framework supplier as necessary. The framework supplier is aware of the need to supply management information to Framework public bodies as part of agreed framework terms and conditions.

Who can use this framework agreement

The framework agreement will be available for use by the Scottish Ministers (including Agencies), Scottish Non-Departmental Public Bodies, offices in the Scottish Administration which are not ministerial offices, cross-border public authorities within the meaning of section 88(5) of the Scotland Act 1998, The Office for the Secretary of State for Scotland, the Scottish Parliamentary Corporate Body, councils constituted under section 2 of the Local Government etc. (Scotland) Act 1994, bodies registered as social landlords under the Housing (Scotland) Act 2001, Student Loans Company Limited, the Commissioner of Northern Lighthouse operating as the Northern Lighthouse Board, Scottish Futures Trust, Equality and Human Rights Commission, Business Stream Ltd, the Business Gateway National Unit at the Convention of Scottish Local Authorities, further or higher education institutions being fundable bodies within the meaning of section 6 of the further and Higher Education (Scotland) Act 2005, any public body established by or under the Scotland Act 1998 or any Act of the Scottish Parliament, any association of or formed by one or more of the foregoing, bodies financed wholly or mainly by one or more of the foregoing, bodies subject to management supervision by one or more of the foregoing and bodies more than half of the board of directors or members of which, or, in the case of a group of individuals, more than half of those individuals, being appointed by one or more of the foregoing. In addition to the contracting authorities listed, the framework agreement will be available to charities entered on the Scottish Charity Register and voluntary organisations entered on the Membership Database of the Scottish Council for Voluntary Organisations.

Information about agencies of the Scottish Ministers, Scottish Non-Departmental Public Bodies and offices in the Scottish Administration which are not ministerial offices is available.

Overview of the governance structure of public procurement for Scotland, including the Public Procurement Group is available.