The costly indecision that led to Liverpool Council adding millions to its energy bill can be traced back over four years.
The Mazars Accountants report into the mishandling of the electricity renewal has set out a series of key dates showing when decisions were made in light of the agreement with Scottish Power. The damaging assessment included a timeline that showed how approval was first given to commence energy procurement with Scottish Power in January 2018.
Owing to delays, the agreement began on June 1 that year. In September 2019, a briefing note was sent from the council’s energy and carbon manager to the assistant director of corporate finance at Liverpool Council stating how renewal of the authority’s electricity contract earlier that year “resulted in increased cost due to an extended evaluation period, market rises and out of contract rates” and a “system ready for change”.
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In June 2021, the energy and carbon manager requested a discussion on the electricity contract with the ethics and compliance officer and 12 days later, informed them of a meeting with procurement to discuss the terms. The report said: “The contract expires 31st March 2022 with an option to extend for 12 months with good reason.
“My own view is that this should be extended if possible.” A month later, a meeting was held with the contract procurement unit regarding the agreement in which no issues were raised and the category manager confirmed the terms could be extended by 10 months to align with the financial year.
On September 30, the assistant director of corporate finance requested clarity on energy purchase and contracts with concerns being raised five days later over increasing prices. The report said had Liverpool Council extended the terms on October 8, 2021, when fixed offers were sent by email from Scottish Power, the price would have been £12.1m.
By January 26 this year, a decision had not been taken but a consultation was held with deputy mayor, Cllr Jane Corbett, when it was agreed the option to extend terms would “provide stability” in the face of the volatile energy market. At the end of the month, an email was sent to the city solicitor summarising briefing meetings held with then-chief executive Tony Reeves to approve a request to allow the extension of the electricity contract.
The decision was made by the directorate to split the Combined Energy Report into separate electricity report and gas briefing note and this was not actioned until February 9, missing the deadline for the February 18 cabinet meeting. The three month deadline for the end of the contract came and went on February 28 - a deal struck at this point would have cost £19m.
On March 3, Scottish Power indicated it would be temporarily closing its trade desks, but during the cabinet meeting the next day, the asset management asset director failed to inform the cabinet and approval was given to extend terms that were no longer available to the council.
Then, 11 days later, Scottish Power told the council: “Unfortunately with the current situation the legal team were unable to pick this up in time. As previously discussed, unfortunately due to the current crisis and the extreme volatility within the energy markets Scottish Power has been forced to pause our sales channels so are unable to offer any contract quotations at this time and do not have a timeline on this.”
On March 17, Scottish Power called the council to inform them of their decision to exit the industrial and commercial market. It was at this point, lead commissioner Mike Cunningham informed then-chief executive Tony Reeves, who was out of the country, that there was a problem.
In an email to Mel Creighton, the then-deputy chief executive, Mr Cunningham said: “We are deeply concerned about how the council has arrived at this position and will need to have a clear understanding of the events leading to the problem now being faced. Thank you for agreeing to share your proposed actions with us.
“As well as the activity to resolve this urgent problem, (including seeking formal approvals for a revised proposition) we would also request an investigation be undertaken into how this situation has arisen. We assume that the Internal Audit team will conduct this review as a matter of urgency and that the findings of that investigation are shared in full with the Commissioners, as well as reported through the appropriate governance mechanisms.”
Mr Reeves asked Ms Creighton to then provide a briefing urgently and on the same day, the energy and carbon manager confirmed the local authority would move onto the more expensive variable rate. It was on March 17, Mayor Joanne Anderson was also made aware for the first time.
Mr Reeves’ request for an urgent briefing was knocked back by the council’s ethics and compliance officer on March 18 as staff were on annual leave. The report said Mr Reeves “ appeared to accept this and not push for a quicker response.”
Assessments into the situation began in April, with commissioners sending back an internal audit report on 13th as the scope was “narrow, and the report lacked transparency and nuance.” It was on May 6 that the original extension was deemed null and void by cabinet as a result of Scottish Powers’ move out of the UK market.
Interviews with key officers and elected members began on May 25 ahead of the publishing of the report just days ago.
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