Councils unite to save on power bills

Auckland's eight councils have banded together before the Super City merger in the hope of driving down their electricity bills for offices, recreation centres and street lighting.

A forum of the councils' chief executives decided in the middle of last year to work together on any substantial contracts before the councils became the Auckland Council on November 1 this year.

They set up a centralised treasury to decide borrowing needs and to source funds using strong credit ratings and quantity of funds sought to crunch deals for longer terms and sharper interest rates.

Now, electricity is the target for savings on a combined annual bill of about $20 million.

A joint tender to supply all the councils went out in November and the bids from four main suppliers are being considered by the councils and the Auckland Transition Agency.

The joint effort has come to light in a report to North Shore City Council.

The action drew more competitive pricing, based on the larger combined load, said council sustainability and procurement manager Michael Field.

He said it looked like the council would spend $7.3 million on electricity over 400 properties from this July to the end of next year.

The combined tender from Contact Energy, Meridian Energy and Genesis Energy was 2.1 per cent higher than the rates for North Shore City's present contract, which was negotiated in 2007.

However, the cost of electricity had gone up since.

He believed the tender accepted by his council was about $400,000 under that allowed for in the 2010-11 budget.

Some councils are nearing the end of the term of their supply agreement, while others are unable to take up the new deal until the middle of next year.

Those under the new deal will depend on the amount used and may soar if there are unusually cold periods or longer than usual cold periods.

However, the combined tender offer was a powerful incentive for suppliers to sharpen prices, said Auckland City Council finance general manager Andrew McKenzie.

THE COSTS

Regional power bill estimates 2010-11

* Fixed rate peak times $5.52m
* Street lighting $6.73m
* Flat charge & lines charge $7 m
* Traffic signals $1.6m