Question reference: S3W-36681
- Asked by: Aileen Campbell, MSP for South of Scotland, Scottish National Party
- Date lodged: 4 October 2010
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Current status: Answered by John Swinney on 26 October 2010
Question
To ask the Scottish Executive what savings are projected for each local authority and public body as a result of the new public sector electricity contracts announced in its news release of 30 April 2009, Public sector power goes greener.
Answer
Approximately 98% of in scope public sector demand in Scotland “ some 24,000 buildings “ is now signed up to our national electricity contracts. Given that public bodies migrated to these contracts on an incremental basis from 1 October 2009 until 1 April 2010, the first full year where the majority of participating bodies received power via the national contracts is April 2010 to March 2011. For that year, we estimate that the contracts will deliver total benefits of around £10 million, with similar benefits achieved until contract expiry on 31 March 2013 - equating to around 5% of total contract value.
Given that both the cost of electricity on the wholesale market and distribution charges have increased significantly over the past year and wholesale costs are likely to continue to rise, benefits take the form of cost avoidance.
While it is for individual public bodies to calculate the benefits they have derived and will continue to derive from the new contracts, we estimate that the £10 million annual benefits will accrue to the participating sectors as follows:
Central Government: 5.98%
Local Authority, Fire and Police: 58.48%
NHS Scotland: 21.04%
Higher & Further Education: 13.78%
Third Sector: 0.72%.
Importantly, the contracts also allow increased budgetary certainty for public bodies, as the flexible procurement model adopted involves multiple purchases on the wholesale market, which smooths out the volatility inherent in large, one-off transactions in commodity markets. Significant process savings have also been achieved for public bodies through going to market once for a large part of the public sector.