Introduction to LASER Energy Buying Group: West London Alliance. Eamon Grimes 28 th May 2014

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1 Introduction to LASER Energy Buying Group: West London Alliance Eamon Grimes 28 th May 2014

2 Purpose of Presentation Background to LASER Energy Buying Group Market Fundamentals LASER s Approach to Trading Success of Our Flexible Frameworks Added Value Services Conclusions

3 Background Who are LASER Energy? Established in 1989, LASER is an energy buying group that is wholly owned by Kent County Council The Group was formed to maximise opportunity in the market and reduce energy costs by aggregating volumes for large public sector groups Currently a market leading energy buyer, working on behalf of >150 public sector groups with an annual energy spend of ~ 350 million

4 Background Why are we presenting to you today? LASER buy energy on behalf of a large number of London Boroughs, including Ealing, Barnet, Brent, Harrow, Hillingdon, Hounslow Our energy frameworks have been approved as best practice for buying energy and are open for all Public Sector / Not for Profit groups Vast Experience with diverse groups - Local Authorities, Education, Housing Associations, Charities, Public Services, NHS Also an opportunity to introduce our sister organisation Lumina Energy, which was formed to work with any Private Sector customers

5 Market Fundamentals - Electricity Additional Services Mandated Fees and Levies 13% Metering 1% Cost to Serve 1% Losses 6% Balancing 3% Network 22% Raw Energy 55%

6 Market Fundamentals - Gas Metering 1% Mandated Fees and Levies 6% Cost to Serve 3% Balancing 3% Network and Losses 28% Raw Energy 59%

7 Market Fundamentals How do you manage these components? Cost-to-Serve Raw Energy Negotiable with Suppliers (55-65% of Total Energy Costs) Mandated Fees & Levies Metering Losses Balancing Network Suppliers are Mandated and/or Regulated for these Charges Total Cost Control

8 Approach to Trading LASER manages energy trading in-house on behalf of our customers, using various risk-management strategies Use Group baskets to aggregate the volumes of all our customers together when trading to achieve best value Significantly reduce supplier cost-to-serve fees due to the large volumes that we represent when trading for our customers Kent County Council act as the Central Purchasing Body for our frameworks, meaning they are OJEU compliant

9 Increasing Budget Certainty Approach to Trading LASER Purchasing Frameworks Fixed Term Fixed Price Prices agreed on a single day prior to the start of a contract. Prices can be fixed for, typically, up to three-years. Can result in large swings in costs between contracts depending on prevailing market prices. Flexible Purchase in Advance Supplier s cost-to-serve fixed in the contract. LASER then purchases energy requirements in multiple blocks prior to the start of a contract year. Spreads market price risk. Flexible Purchase within Period Supplier s cost-to-serve fixed in the contract. LASER then purchases energy requirements in multiple blocks prior to and within a contract year. Further spreads market price risk. Increasing Market Opportunities

10 Success of our Flexible Frameworks External Benchmarking carried out by Cabinet Office s Efficiency and Reform Group Compared purchase prices Apr 09 Mar 11 against average market FTFP prices (Raw Energy Commodity, 55-65% of delivered costs) LASER outperformed benchmarks by: Elec: 7% PIA and 20% PWP Gas: 6% PIA and 30% PWP

Success of our Flexible Frameworks LASER has developed same benchmark approach to assess our energy purchasing performance verified externally Compared purchase prices Oct 09 Sep 13 against average

11 Success of our Flexible Frameworks LASER has developed same benchmark approach to assess our energy purchasing performance verified externally Compared purchase prices Oct 09 Sep 13 against average market FTFP prices (Raw Energy Commodity, 55-65% of delivered costs) LASER outperformed benchmarks by: Elec: 4.7% PIA and 4.4% PWP (Oct 09 Sep 12 for PWP) Gas: 2.7% PIA and 7.6% PWP (Oct 09 Sep 12 for PWP)

12 Success of our Flexible Frameworks Other Key Framework Benefits: Price Validation (35-40% of Energy Cost) LASER validate all the Mandatory & Regulated Charges Typically involves validating up to 4 million pieces of data each year Recent examples found 80% of initial error Corrected errors impacted on 0.75% of final delivered energy price Supplier Management Fee (1-3% Energy Cost) Framework Supplier Cost-to-Serve fees are minimal in comparison to stand-alone contracts Recent example of a Council paying 10x the cost-to-serve on LASER s frameworks on their own flexible contract (monetary saving of 108k pa)

13 Added Value Services Bureau Services Energy Procurement Energy Management Price Validation Mandatory Reporting Account Management & Invoice Validation Query Management

and paid by LASER Billing and query reports provided to

14 Added Value Services Fully Managed Supplier Invoices Received Site portfolio maintained Invoices validated and paid by LASER Billing and query reports provided to customer LASER invoices the customer Account &Query Management

15 Added Value Services Energy Bureau Service Energy Reporting & Online Dashboard Dashboard function designed to give a quick overview of a sites energy usage and cost including C02 emissions. Widgets display usage in graphical formats to show performance against previous years or targets. These widgets can be customised to suit your requirements.

16 Lumina Energy - In response to numerous enquiries from Private Sector Customers Lumina Energy was launched in Sister Company to LASER, also wholly owned by KCC - Provides both Fixed and Flexible framework options - Procurement & Energy Bureau Services - Working with various Private Sector groups ranging from SME, multisite organisations, up to large I&C Businesses

17 Conclusions - Benefitting from large baskets with aggregated energy spend of ~ 350m per year - Flexibly Purchasing consistently outperforms market average FTFP and manages risk of a volatile market, minimises budget shock - In combination the purchasing approach and services can save an average of 5-10% + - Vast Experience & Customer Focus, trusted with large public sector energy spend - Lumina Energy can work with any Private Sector customers, with same dedicated approach to service & range of options

18 Conclusions What Next? Contact us to make an enquiry We will consult with you & discuss your requirements Find the best solution to manage your energy costs Transparent about costs for each service Contact Us: Websites:

19 Questions?

Electricity & Gas Contracts

Electricity & Gas Contracts (Ealing) Schools Information Networking Group 23 rd February 2016 Kevan Walsh CEO Zenergi Our Credentials Meters supplied 4,727 Total number of school clients 1,071 Total spend