The London Energy Project - an advisory body funded by Capital Ambition , London’s improvement and efficiency partnership - says councils could save up to 10% by buying through “risk managed, aggregated, flexible” contracts.
Many currently operate fixed energy contracts, which are put out to tender on an annual or bi-annual basis. But by buying flexibly on the financial markets through a purchasing consortium, councils can slash energy costs.
Although oil prices have fallen considerably from a high of $147 a barrel in July, the cost around $100 a barrel still has knock-on effects in everything from highways maintenance to heating buildings.
But energy experts claim that more than half of councils are still using traditional fixed contracts.
Local government’s annual fuel bill stands at around£1.3bn a year 40% of the public sector total.
The LEP has recommended three providers Laser, OGC Buying Solutions and the Energy Consortium which councils should approach to get involved.
LEP change manager Amanda de Swarte said: “It is important that councils buy through flexible, aggregated and risk managed contracts.
“By aggregating and buying flexibly you get access to markets that you would not be able to get access to on your own. This means you can avoid 5% of the costs straight away.”
The OGC supported the call for flexible risk managed contracts. A spokesman said: “We are working with buying organisations including the Regional Improvement and Efficiency Partnerships to ensure all local authorities use these contracts and, as a result, reduce their energy costs.”