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LGA electricity contracts to save councils $14 million

New electricity supply contracts negotiated by LGA Procurement will save South Australian ratepayers approximately $14 million over the next three years.

LGA President Mayor Sam Telfer said these contracts would commence in January 2020, and cover more than 90% of South Australia’s councils.

“Electricity is a major cost for councils, but working together and aggregating our spend allows us to lock in massive savings for our communities,” Mayor Telfer said.

“Over the past six months LGA Procurement has negotiated new electricity contracts on behalf of the sector that will deliver around $14 million in savings to participating councils.”

“This is an outstanding result that will drive downward pressure on rates.”

LGA Procurement is a wholly-owned subsidiary of the Local Government Association of South Australia, and provides procurement services and advice to South Australian councils.

The three new contracts are for electricity supply above 160 MWh (large sites such as swimming pools and civic centres), below 160MWh (small sites such as small libraries and council offices), and 12/24 unmetered (street lighting, traffic lights, pedestrian crossings).

The contract for small sites is with Origin Energy, and the contracts for large sites and unmetred supply are with Infigen Energy.

Each of the contracts covers only the supply of electricity, which makes up around 40% of the total cost, with the remaining 60% comprised of non-negotiable distribituion and regulatory costs determined by the Australian Energy Regulator. All three agreements will commence on 1 January 2020 for a period of three years, expiring 31 December 2022.

The total spend by participating councils across the lifetime of all three contracts is expected to be around $48 million, compared to approximately $62 million over the previous three-year period. This represents a reduction of around 22.5%.

Mayor Telfer said the new electricity contracts would also help councils deliver better environmental outcomes.

“The majority of the electricity will be sourced from renewable energy providers, with 60% of the electricity provided by Infigen sourced from their Lake Bonney wind farm,” Mayor Telfer said.

LGA Procurement Chair Mayor David O’Loughlin said “LGA Procurement is entirely focused on driving better value for councils and their ratepayers through procuring electricity, road materials, ICT equipment, fuel, vehicles, uniforms, and even dredges”.

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