Supplier Bootcamp SessionElectricity & Gas Procurement

RM6011 & RM6012

Tuesday, 13th Feb 2018

Agenda

• Welcome

• Introduction to CCS

• Overview of Requirement

• Scope of Agreement

• Available Opportunity

• The Procurement Process

• Next Steps

CCCCS

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Welcome to Crown Commercial Service

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Crown Commercial Service

The Crown Commercial Service (CCS) brings together policy, advice and direct buying; providing

commercial services to the public sector and saving money for the taxpayer.

Executive Agency of the Cabinet Office operating as a Trading Fund

We work with over 17,000 customer organisations in the public sector and our services are provided by

more than 5,000 suppliers.

Our roles include:

● make savings for customers in both central government and the wider public sector

● achieve maximum value from every commercial relationship

● improve the quality of service delivery for common goods and services across government

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Goals and Drivers

Strengthening the UK economy through effective

policy delivery

Maximising commercial benefits

Focusing on our customers

£12.4bn spend

£6bn CG £6.4bn

WPS

£430m of CG

Commercial

Benefits

£295m of WPS

Commercial

Benefits

Welcome to Utilities and Fuels

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The areas CCS deliver

£520m

savings by

2019/20

£420m

savings by

2019/20

£520m

savings by

2019/20

£540m

savings

by

2019/20

Facilities management

Utilities & fuels

Property maintenance

Construction

Professional services

Workforce

Employee & people services

Cloud & digital

Network services

Software licensing

Technology products & services

Fleet

Financial services

Travel

Office solutions, print, post & storage

Marketing & communications

Contact centres

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£725m commercial

benefits including savings

Identifying new opportunities to deliver superior customer

savings across power, gas, fuels, demand reduction

£2.3bn spend and £110m savings across CG and WPS

(15/16)

Percentage Split of Customers – 34% CG, 35% NHS, 31%WPS

7 current frameworks and 5 in the pipeline, 14 people in Strategic

Category, and 12.5 people in Customer Operations

1100 Customers across all products

CCS Utilities and Fuels Team

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Category Structure

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Overview of Procurement

• We have two agreements in the market for the Supply of Half Hourly Electricity (RM1075) and

Natural Gas (RM1076). The current agreements expire in April 2019

• Requirement is for a Gas and Electricity Supplier to provide the following services:

• the supply of Electricity and Gas (including Interim Supply)

• the Customer Administration Services and the Partnering Services

• Access to a range of Ancillary Services

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Contractual Arrangements

Tripartite Agreement

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Framework Structure

The framework Agreement is the agreement between yourselves and Crown Commercial Service outlining the

requirements and expectations for the delivery of the Agreement.

It is made up of:

● Terms and Conditions

● The Model Contract

● Ancillary Services Schedule

● Schedule 3 - Trading Requirements

● Schedule 5 - Customer Administration Services

● Schedule 6 - Framework Management

● Schedule 7 - Key Performance Indicators

● Customer Access Agreement

We will be issuing a copy of the current redacted Framework Agreement for your review and comment

as part of our engagement processes.

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What does success look like?

● Desirable product in the marketplace to retain current customers and stimulate

growth of customer base;

● High quality supplier(s) appointed to deliver best in class solution to public sector;

● Value for Money route to market;

● Access to trading desks and support to facilitate market transactions on wholesale

energy market;

● CCS to establish a close strategic relationship with the successful supplier(s) to

drive continuous improvement and innovation during the life of the agreements.

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Customer Benefits

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Customers continually use the Crown Commercial Service Utilities and Fuel offering

because:

Trading Requirements

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Trading Requirements

CCCCS

• Overview - Contracts, CCS Products

• HH Framework

• Gas Framework

• Supplier Requirements - what does all this

mean for you?

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Overview

CCSSupplier

Customer

Customer Access Agreement (CAA):

● Sets customer commitment to CCS

● Aligned to CCS ‘products’

Framework Agreement includes:

● Supplier requirements to support CCS flexible, aggregated purchasing - price setting, price build up, energy

and non-energy cost reconciliation

Model Contract: sets out

requirements / obligations

between customer & supplier

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CCS Products

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CCS Products - Timeline / Volumes

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HH Framework

Price Setting / Invoicing

Prices set at start delivery year:

Supplier applies CCS price matix to build

meter-specific energy prices

For variable prices where purchasing

ongoing, CCS provides reference baseload

& peak prices

Variable basket energy reconciliation:

● Forecast to actual prices

● Allocated by EAC

● Separate invoice line item

Shaping

CCS provides list of committed customers

for product - “baskets”

Supplier creates aggregated half-hourly

demand for committed customers - the

“provisional shape”

Shape blocked into base & peak

Remaining half hourly volumes = residual

Final committed customer demand shaped

close to delivery start. “Final shape”

At this stage volume risk transfers to

supplier

Flexible Purchasing

CCS Risk set controls (eg stop loss) once

shape agreed

CCS Trading use Supplier desk to transact

base & peak requirements

● Market orders, index trades

● Sell-back

● N2Ex for variable products

● 3rd Party provisions

Residual volumes:

● HH shape trades before delivery

● N2Ex

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Gas Framework

Price Setting / Invoicing

Locked basket prices set start delivery

year, applying CCS prices applied to meter

profiles - “reference price”

Monthly price actualisation for all baskets:

● Daily balancing - daily demand

estimation applied to SND volumes

● Resulting volumes bought / sold at

DA Heren prices to derive volume

weighted monthly achieved price

Variable baskets invoiced at validated

monthly achieved price - “monthly price

change

Locked baskets annual reconciliation

Shaping

CCS provides list of committed customers

for product - “baskets”

Supplier creates daily demand for committed

customers - the “provisional shape” using

industry data

Final committed customer demand shaped

close to delivery start - “Final shape”

Variable Products only:

● Daily granularity

● Weather corrected daily forecasts

Volume risk retained by customer

Flexible Purchasing

CCS Risk set controls (eg stop loss) once shape

agreed

CCS Trading use Supplier desk to transact base

& peak requirements

● Market orders, ICE settlement, index

● Sell-back

● 3rd Party provisions

Variable Products only - within month contracts

CCS purchase to variable cover % - typically

90% but can be as low as 70%.

Remaining volumes purchased at DA price

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Key Takeaways?

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Supplier Considerations?

● Provide (indirect) access to wholesale markets for CCS price setting

activities within Framework period

○ Desk 09:00 - 17:00

○ Range of price setting options - market, trigger, index (eg ICE,

Argus),

● Long Term product purchases sleeve from current providers (we are

already purchasing for April ‘20 baskets)

● Long Term product purchases beyond term

● Credit / GTMA implications?

● Systems to support basket shaping / forecasting, pricing, invoicing,

reconciliation

The Procurement Opportunity

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The Opportunity

Electricity GasStart Date: 27/03/2015

End Date: 26/03/2019

Customers: 855

Start Date: 27/04/2015

End Date: 26/04/2019

Customers: 840

Current Service Requirements

The core service elements to be delivered through the agreement will include:

● Provision of a dedicated customer account manager to deal with queries and

complaints;

● Access to a customer service team for administrative activities;

● Access to Framework Manager responsible for the delivery of the agreement;

● Option for a range of billing and payment terms;

● Provision of reports on request from the customer or CCS;

● Access to an online data portal;

● Provide interim pricing for customers;

● Complete market transactions as determined by the Authority;

● Creation of Final Purchase Shape for the Authority;

● Provide suite of supporting ancillary services including: site works, AMR services and

consumption reduction services.

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Areas for Consideration

We are also considering a number of potential developments for our current

arrangements including:

● How we can improve our Ancillary Service offering to provide the right services to our

customers?

● How can we offer a more digital or ‘self service’ element to support customers in using

the agreement?

● How can we enhance our current service offering without significantly impacting on

the end cost for customers?

● How can we work to support the government’s and our customers’ sustainability and

social value requirements?

● How can we increase innovation through our agreements?

● How can we work with the supplier(s) to educate and inform the customer during the

life of the agreement?26

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The Opportunity – London Energy Project

Current Gas Portfolio with CCS:

AQ Volume: 23,500,000 Therms / 0.69TWh

Current Electricity Portfolio with CCS:

EAC Volume: 0.26TWh

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The Opportunity – London Energy Project

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The Opportunity – Peer to Peer Trading

● Development of ‘blockchain’ technologies and the option to trade generated electricity, CCS are

looking to understand the potential for creating a public sector energy trading portal.

● Customers who generate energy will be able to set a price and trade with other public sector

customers looking to purchase.

● This will need to include billing options.

● Separate engagement will be taking place to better understand this requirement with dates to be

confirmed.

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The Opportunity – Utilities Switching Services

● New initiative much like the switching and comparison sites we

use at home - aimed at small and medium sites

● Become an energy supplier via a Dynamic Purchasing

System: quantitative (yes/no) questions only - easy

onboarding for SMEs

● Attract new smaller customers who want tariff flexibility, choice

and ease of use

● Go-live anticipated August 2018, engagement now being

carried out prior to tender

Email us at gov-switch@crowncommercial.gov.uk for more information

86 Bluelight sector

covering Policing &

Fire Services

c. 24,000 Schools

within Education

Sector - DfE

endorsement ongoing

c. 390 Local

Authorities / Local

Government

1000+ Charities

/ 3rd Sector

Market opportunity - key customer demographic...

What route is right for you?

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The Procurement Process

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Procurement ProcessP

re-

Ma

rket

En

gag

em

en

t Supplier Bootcamps

RFI docs

One to one meetings

Customer Stakeholder Panel

Customer Questionnaire

Final Business Case and Procurement Strategy

Te

nd

er

Sta

ge Development of Tender

Documents

Development of T&C’s

Development of Specification

Development of PQQ and Award criteria

Tender Response Evaluation

Framework Award Fra

mew

ork

Ma

na

ge

men

t

Customer onboarding process

Management of Supplier performance

Strategic framework development

Continuous Improvement and Innovation

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The Procurement Process

Document Description

OJEU Notice Advertisement of TED to notify the market of the opportunity and register their

participation

Framework Agreement Outlines the Terms and Conditions of the Agreement which all Suppliers will

need to adhere and complementary schedules

Customer Access Agreement Customer signed authority that enables CCS to transact and set prices on

their behalf.

Model Contract Document outlining customer requirements from the supplier in the delivery of

their contract e.g. payment terms

Pre-Qualification Questionnaire The qualification of suitable Suppliers to progress to the Award questionnaire

Award Questionnaire Evaluates Suppliers quality and capabilities to select the most capable

Suppliers for Award

Pricing Matrix Suppliers submit their prices to deliver the specified services within the

agreement to assess VFM.

What Happens Next?

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Timelines

Electricity

Gas

2018

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2019

PIN

Publication

Jan 18

PIN

Publication

Jan 18

FBC & SD

Approval

May 18

FBC & SD

Approval

May 18

OJEU & PQQ

Publication

Aug 18

OJEU & PQQ

Publication

Sept 18

ITT

Publication

Sept 18

ITT

Publication

Oct 18

Response

Deadline

Oct 18

Response

Deadline

Nov 18

Award

Jan 19

Award

Feb 19

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Next Steps

Supplier Engagement

Slides will be sent out and available online following meeting

● Supplier Webinar – 22/02/2018

● Supplier RFI release- 20/02/2018

● Supplier 1-2-1’s (London and Liverpool) - March/April 2018

● Project Update Meetings - June - August 2018

We will also be issuing regular updates on our progress on our dedicated webpage

including presented materials.

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Questions?

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How to Keep in Touch

Electricity Procurement Inbox:

rm6011procurement@crowncommercial.gov.uk

Gas Procurement Inbox:

rm6012procurement@crowncommercial.gov.uk

Project Webpage:

http://ccs-agreements.cabinetoffice.gov.uk/procurement-pipeline/supply-electricity-

rm6011-and-gas-rm6012-procurements

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Contact Details

Elaine Malone (Electricity Lead)

Portfolio Development Lead

elaine.malone@crowncommercial.gov.uk

Kristen Green (Gas Lead)

Category Manager

kristen.green@crowncommercial.gov.uk

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