Crown Commercial Service

South West NHS Energy Group – Energy price benchmarking report

The public sector energy challenge

NHS trusts are regularly approached by a range of public and private sector providers looking to get them to switch their energy deals. These providers, known as Third Party Intermediaries (TPIs) will typically claim to be able to outperform the Crown Commercial Service (CCS) on the energy markets and deliver greater savings.

Assessing these claims and understanding if switching is the right thing to do can involve trusts investing significant time, effort and resource. To help address this the Associate Director of Estates for Poole Hospital NHS Foundation Trust – George Atkinson, recently undertook a benchmarking project on behalf of the South West HEFMA Energy Group. This set out to provide an independent review of CCS trading performance against 1 of the largest TPI’s.

The solution

With a longstanding background and understanding of utilities and the energy markets, George was able to run a comparison of the different trading strategies on offer in order to determine potential areas of savings for the trusts. Whilst looking back over a number of years, the focus was given to the 15/16 year out turns.

The results

It was clear from the findings that for both gas and electricity, the best performing trade baskets during 15/16 were the CCS short term variable options (known as V6 baskets). Whilst the V6 baskets do expose customers to more volatile month on month price changes, they allowed customers’ pricing to reflect movements in the market on a real time basis. When comparing the 15/16 CCS V6 baskets against one of the largest TPI’s in the market, the CCS V6 basket provided greater trade savings than all alternative managed traded baskets on offer.

The findings from the South West group were also verified by an NHS trust in the Midlands region. The results were the same – CCS clearly provided greater savings for the trusts.

The graphs below show the output of the benchmarking project on a month by month basis with the results covering a full year’s consumption/cost comparison:

It was recognised that looking only at a single year held limitations. Longer term trade performance research over periods greater than 3 years has been conducted by independent bodies such as the London Energy Project (LEP). LEP reports are available to member organisations at www.londoncouncils.gov.uk.

Whilst CCS is a not for profit organisation it does charge a commission for its services. This commission rate is clear and transparent for all customers and is based on a single charge per meter (not on a pence per kilowatt hour rate). Evidence provided from trusts who have moved back to CCS or those that have been approached by alternative providers (whether from the private or public sector) has revealed that the CCS rates are substantially lower than those of other providers. The sales approach used by other providers appears to be to bundle a range of services in order to justify the increased costs. However, on closer inspection, a large number of these are provided free of charge as part of the CCS frameworks with the suppliers and are fully covered as part of the standard CCS commission rates.

In summary

Getting the best possible deal on energy costs is a key priority for all public and third sector organisations and allows them to focus more of their resources on delivering against their key priorities. Our trading performance is subject to regular independent reviews such as the study described here undertaken within the NHS. These consistently show CCS to provide best value.
Get involved

Before considering any change to your energy provider why not come and talk to us or your existing CCS supplier? Together we can help you to manage your portfolio set up and reduce your overall energy demand to make real savings without the risk of switching providers.

Got a question or want to find out more? Complete our online form and mention either gas, electricity or both in the comments box depending on your requirements.

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