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Budget for energy
Getting the right energy deal for your school is crucial. As schools grapple with inflated bills, energy consultant Tim Warneford looks at what’s gone wrong and how to fix it
A
s if school budgets weren’t tight enough already, April’s energy price hikes added even more pressure.
Many schools within local authority procurement frameworks were shocked at their new energy rates. Academies weren’t immune either, particularly if they had used unregulated brokers working on commission from suppliers. An NAHT survey of school leaders
found that 15 per cent were reducing the number of teachers, or teaching hours, to deal with rising prices. More than half were reducing investment in equipment, maintenance and capital spending. The DfE is belatedly looking
at how it might support schools, having previously stated that the
impact of rising energy prices would be ‘minimal’. Try telling that to schools which have seen energy costs more than double, with the average bill now close to 3.5% of the total budget. Running a webinar with School
Business Services in February, I heard from many schools facing difficulties because they had not procured new energy contracts last year when prices were lower. The director of finance at the Inspiring Primaries Academies Trust in Leicestershire, Chris Hall, talked about the ‘Hobsons’s choice’ facing schools. He had been quoted a 24-month contract at a rate increase of 126%, or a 12-month contract at a staggering 170%. The problem is that since schools
operate within commercial spaces, they have to buy from an energy market that is unregulated. This puts them at risk from brokers who ‘cold call’, particularly if no due diligence is undertaken before a provider is appointed. Neither can local authority frameworks guarantee Best Value, since they lack a transparent competitive tender process. At best, such frameworks can act as a tracker, but rates are not disclosed in advance and there is very little protection for schools from large spikes in cost.
Future options According to the chief executive of Centrica, Chris O’Shea, high energy
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