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Electricity price spike for councils

The local government sector will pay an average of 17% more for power over the next two years, highlighting that urgent action is required at both a state and federal level to bring relief to the cost-of-living pressures faced by South Australians.

LGA Procurement signed three new contracts with Origin Energy this week to secure approximately 150GWh or a $43 million dollar spend on electricity to most councils across South Australia over the next 24 months, effective from 1 January 2018.

One of these contracts (Small sites), which will mainly impact on smaller councils, will see the cost of electricity spike by 70% over two years despite the LGA’s success in obtaining the best possible price under a sector-wide procurement deal.

LGA President Lorraine Rosenberg said the contracts were a good deal in a bad environment.

“As rate payers would be personally aware, electricity is a major cost pressure and local councils aren’t immune to it,” Mayor Rosenberg said.

“However, by working together as a sector, these contracts will save the sector millions of dollars over the next 24 months in the face of the skyrocketing price of electricity which has been well publicised.

“It is further proof that the state and federal governments must continue to focus on reducing power prices for South Australians and why it’s even more important for decision-making to be kept at a grassroot level at councils, instead of being centralised under the rate-capping regime proposed by the SA Liberal Party.”

The two-year fixed deals provide councils with a balance between minimising risk in the volatile national electricity market and leaving open options for the expected market changes including the influx of renewable opportunities.

Mayor Rosenberg said the LGA would continue to work with councils to minimise energy costs and the associated environmental impacts.

“Earlier this year, we worked closely with councils to undertake strategic energy audits, and last month, we provided them with bespoke recommendations based on their individual results,” Mayor Rosenberg said.

“We’re also advocating for an Energy Productivity Program for local government which could provide state government support to bring forward investment in funding to council energy efficiency projects.”

Background

Small site (Below 160mWH): Council offices and depots, park amenities, smaller libraries

Large site (Above 160mWH): Swimming pools, gymnasiums, larger libraries

12/24 unmetered: Street lighting, traffic lights, pedestrian crossings

Note: Each local council has different electricity requirements depending on factors including the facilties it operates and size of population. Hence the actual cost per council will differ significantly due to the various combination of supply contracts required. Eg. Mainly smaller sites, a combination of Small and Large sites, plus street lighting electricity requirements.

The procurement process undertaken by LGA Procurement was only for the supply of electricity which constitutes around 40% of typical total costs. Councils will face a range of non-negotiable charges related to distribution and regulatory costs.

 

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