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Cabinet – 14th November 2012 – West Mercia Energy Joint Agreement

Committee and Date Item

Cabinet 14th November 2012 12 12.30 pm Public

WEST MERCIA ENERGY (WME) JOINT AGREEMENT

Responsible Officer Rachel Musson e-mail: rachel.musson@.gov.uk Tel: 01743 252007

1. Summary

1.1 This report provides for the termination of the existing joint agreement with West Mercia Supplies following its sale, and the introduction of a new joint agreement with West Mercia Energy.

2. Recommendations

2.1 Cabinet are asked to authorise:-

A. Terminate the existing West Mercia Supplies Joint Agreement.

B. Conclude a new JointAgreement under the terms of the Local Authority (Goods and Services) Act 1970 with the other three owning authorities to establish a Joint Committee of the executives of the four authorities to manage the activities of West Mercia Energy.

REPORT

3. Risk Assessment and Opportunities Appraisal

3.1 The recommendations contained in this report are compatible with the provisions of the Human Rights Act 1998.

3.2 There are no direct environmental, equalities or climate change consequences arising from this report.

1 Cabinet – 14th November 2012 – West Mercia Energy Joint Agreement

4. Financial Implications

4.1 There are no direct financial implications arising from this report.

5. Background

5.1 At its meeting on 29th June 2011, Cabinet authorised to progress the sale of West Mercia Supplies.

5.2 The sale of the catalogue/warehouse division of West Mercia Supplies to The Consortium for Purchasing and Distribution Ltd for the sum of £6.74m (which, after deductions of selling expenses, was distributed equally between the four owning authorities) was completed on 18 April 2012.

5.3 It did not prove possible to sell the Utilities Division of West Mercia Supplies and this has been retained by the four owning authorities and continues to trade as West Mercia Energy.

5.4 West Mercia Energy has transferred to premises in Shrewsbury and employs 11 staff (who are employees of Shropshire Council at law).

5.5 West Mercia Energy turnover in 2012/13 will be approximately £53m and the operating surplus is likely to be approximately £1.25m which will be distributed amongst the four owning authorities according to a formula which recognises the differing levels of turnover and contribution to that surplus made by the four owning authorities.

5.6 Customers of West Mercia Energy include, as well as the four owning authorities, Gloucestershire County Council, Borough Council, Council, Council, Cheshire West and Chester Council and a number of District Councils.

5.7 The existing Joint Agreement was developed to manage the activities of a warehousing and distribution operation for the purchase and supply of office and educational products and, as such, is no longer fit for purpose.

5.8 The new Joint Agreement will be appropriate for the on-going activities of the re-structured business going forward.

5.9 The agreement will initially run until 31 March 2016 but may be extended by agreement between the four owning authorities. There are no provisions for withdrawal during the initial period.

5.10 Each of the four owning authorities will appoint two Members of the Joint Committee with the Secretary and Treasurer functions being fulfilled by Shropshire Council as the lead authority.

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5.11 It is envisaged that the first meeting of the West Mercia Energy Joint Committee with take place during February 2013.

List of Background Papers (This MUST be completed for all reports, but does not include items containing exempt or confidential information)

Agendas and Minutes of the following meetings:

Cabinet Item 11, 29 June 2011

Cabinet Member (Portfolio Holder) Martin Taylor-Smith, Transformation

Local Member

Appendices Appendix A – West Mercia Energy Joint Agreement

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