The Russian invasion of Ukraine will land Sefton Council taxpayers with an additional £4million bill this year due to rising energy prices caused by the war.
The local authority also faces a £300,000 rise for fuel needed to power its vehicles.
And schools across Sefton also face hefty hikes in their bills, with exact figures yet to be discovered – which are forecast to have a substantial impact on their budgets.
In his report to Cabinet next week, Sefton Council’s Executive Director of Corporate Resources and Customer Services Stephan Van Arendsen said: “Members will be aware of the energy cost price increases that are currently being experienced globally.
“Within Sefton, the council procures its electricity and gas through framework contracts following a procurement compliant process. The frameworks have been in place for four years and are:
- Gas- North East Purchasing Organisation (NEPO); and
- Electricity- Yorkshire Purchasing Organisation (YPO)
“Each of these framework contracts has a large number of public sector bodies on them including a large number of local authorities. The operating model for these contracts is to buy gas and electricity over the preceding 12 months in order to spread cost and volatility risk.
In advance of the 2022/23 financial year this process was undertaken but as September 2021 approached prices started to increase substantially- at that point 50-60% of the future year’s requirement had been purchased. Decisions were made by the providers based on modelling for additional purchasing to be delayed for when the price reduced.
“This started to happen and would have supported the strategy of the provider, however the war in Ukraine sparked significant price increases once again.
“As a result, the remaining requirement for this year will be purchased by the contract provider in the period up to September 2022, (electricity) and monthly to end of year (gas), when market conditions are favourable and over the Summer when prices are usually lower.
“From the modelling undertaken it is estimated that the additional cost to the Council will be £4million in this financial year.
“The Council is monitoring pricing during the start of the year and the 2-3 year forecast for both gas and electricity prices and this will inform financial planning for the forthcoming budget period. 4
“A similar position exists with regard to fuel for the Council’s vehicle fleet and other such operations – it is estimated that the cost pressure in these areas is £300,000.
“The Council, like a number of other local authorities, buys gas and electricity on behalf of a number of schools. These schools have been written to in recent months with details of the price increases for the next year and it is appreciated that this will impact on in-year financial management, particularly for those who had been forecasting a deficit financial position.”
Do you have a story for Stand Up For Southport? Please message Andrew Brown via Facebook here or email me at: mediaandrewbrown@gmail.com
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