Failing to properly renew its electricity contract last year cost Liverpool Council more than £2m extra to keep the lights on.
Almost a year on from its costly contract error, new details are continuing to emerge on how the city was hit on its balance sheet from the mistakes made. In April last year, local authority leaders were not informed that the electricity provider it was dealing with had withdrawn from the commercial market, leading to the council - and other city institutions including schools and the fire service - being placed on a far more expensive contract.
Following that error, a devastating report was published by accountants Mazars, who were commissioned by the Mayor of Liverpool Joanne Anderson, to carry out an external investigation. Last month, the city council signed off on plans to reimburse schools more than £2.3m after its expensive contract mistakes.
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Fresh details have now emerged about how much different areas were hit by the council’s failure to secure an efficient deal. A report to be discussed at next week’s finance and resources select committee said the period in which Scottish Power charged the above market rate for electricity stretched between April and June.
As a result, Liverpool Council incurred an additional cost of £1.1m for its operational buildings and a further £1m for street lighting. An additional £350,000 bill was slapped on Merseyside Fire and Rescue Service.
Added up with the schools fee of £2.3m, the council was in the red for an additional £4.8m for a two month period. As a result, it is expected that for the whole year April 2022 to March this year, Liverpool Council is expected to pay £24m for its electricity across those three areas, rather than an expected £19m.
These estimates exclude Paddington Village and include actual consumption bills from Crown Commercial Service inclusive of the energy bill relief scheme. The total final costs will not be known until February and March invoices have been completed, which is expected by early May.
The report to the finance committee was written by Lee Kinder, assistant director asset management. Mr Kinder was named in reports into the failing last year as being responsible for not informing cabinet as early as March of Scottish Power’s (SP) decision to temporarily close its trade desks, which ultimately led to the move to a more expensive tariff.
Mr Kinder openly admitted this is something he should have done, according to the report, but had not acted with deliberate intent to mislead. It added how Mr Kinder “openly admitted that, with the benefit of hindsight, he should have informed Cabinet of the material change in SP’s circumstances.
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