Surrey County Council is hoping to save nearly £750,000 a year over three years from 2009 by changing the way it buys energy through a South East consortium.

The county council's decision-making Executive has agreed to move to a new flexible way of purchasing energy from next year to try to reduce the impact of soaring costs by getting the best possible deal.

The switch comes after Leader of the Council Nick Skellett sent a letter to Prime Minister Gordon Brown highlighting that the projected impact of rising energy prices on operations could total an extra £4.2 million in the 2009-10 financial year, which could equate to a one per cent rise in council tax.

Based on evidence for organisations of a similar size and consumption rate, the county council forecasts that buying gas and electricity under the flexible scheme through public sector professional buying organisation Laser could deliver a saving of about five per cent between the start of the flexible energy contract in 2009 and 2012.

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If the figures for the past two financial years and the expected bill for the 2008/09 financial year were used the potential savings over the three-year period could equate to £2.2 million or £733,000 per year.

Previously the county council has signed up to fixed price contracts. The flexible system works in a similar way to a capped rate mortgage. It means the county council locks into a fixed agreement when prices go above an upper limit and takes advantage when wholesale prices for energy, which is bought as a commodity on a traded open market, drop as a result of daily changes in demand and supply, Government policy and international economic influences.

The energy can be bought on deals over variable periods within a three-year contract with Laser, which is the largest public sector buyer in the UK. Laser’s staff monitor the power industry and market to ensure they strike, like effective stockbrokers, at the exact time that the price is right.

Michael Gosling, the county council's Executive Member for Resources, said: "Just like householders in Surrey are feeling the squeeze from the steep price rises in energy bills, the county council is feeling the financial pressure for heating and lighting its many buildings.

"However, just like householders are able to shop around to get the best energy deal, we are now in a position to find the best way to reduce the impact of soaring costs and to continue delivering value for money to our residents by using a consortium that can buy power more efficiently and cost-effectively.

"We have to act. There are no fixed price energy deals available now that remotely compare to those of just couple of years ago because of the vastly different economic climate. The chance to protect against price rises while taking advantage of falls is an opportunity we could not afford to pass up so that we can pass on the savings to our council taxpayers."

(CD/JM)