Utility Week

12 | 28th March - 3rd april 2014 | UtilitY WEEK Policy & Regulation Market view Procurement rule changes EU reforms of procurement rules could prove a double-edged sword for the unprepared, says Liz Wilson-Lamb. I t sounds like a dream come true for any- one working in utilities procurement. Aer the biggest shake-up in a decade, a ra of European directives look set to speed up, simplify and reduce the cost of utilities procurement. The new rules are also aimed at creating a level playing field for suppli- ers of all sizes while clarifying "gaps" in legislation In reality, the changes could be some- thing of a double-edged sword. While they provide real opportunities for suppliers (par- ticularly smaller companies), they introduce potential risks for buying authorities. It is no secret that there is an abundance of investment going into utilities. But with a pipeline of high value contracts on the table, and a ra of new rules about to be incorpo- rated into British law, regulated utility buy- ers must act now to ensure suppliers of all sizes are given access to opportunities – or they face being challenged. Achilles operates the UVDB – the pre- qualification and accreditation system for the UK utilities industry. In total, 1,000 buyers from more than 80 utilities use the UVDB to find suitably qualified suppliers. Several buying organisations also use the community as an approved mechanism for tendering for contracts above and below EU threshold contracts – streamlining the pro- curement process. In addition, Achilles runs a consultancy for EU procurement, offering practical training courses, workshops and specialist advice. There are three important steps that pub- lic sector buyers can undertake to protect themselves from a potential increase in the number of supplier challenges. The first is simply to understand the main changes, of which there are seven that utility buyers need to be aware of: • utility buyers will only be able to demand a minimum supplier turnover figure of up to two times the value of the contract, to give transparency to suppliers and cer- tainty to buyers; • there will be a greater onus on utility buyers to explain why they have not split large contracts into smaller lots, to fur- ther encourage participation from smaller suppliers; • utility buyers will have greater power to exclude underperforming suppliers; • timescales have been shortened to speed up the buying process for all parties; • utilities' frameworks will now be restricted to a maximum of eight years; • the full force of OJEU regulations will apply to significantly more contracts. Only in exceptional cases can buyers use the lighter regime, formerly known as part B, for procuring nominated services; • there is greater clarity about what consti- tutes a "material change" of a contract to give greater certainty. The second thing utility buyers can do to protect themselves is to understand the risks. The UK government has said it aims to implement the new directives into law within the next six months, ahead of the 24-month deadline. Therefore it is critical that utili- ties and suppliers act now to incorporate changes in time, or they risk costly mistakes. With mounting scrutiny about financial decisions, utility procurers should get to grips with the new rules now to avoid spend- ing time and money on legal challenges later. The third protective step is to take action. Buyers should act now to check that all their procedures and contracts are watertight and in line with expected legislative require- ments. It is likely that the courts may take a view that they should be moving in the direc- tion of expected legislation. Utility buyers should also engage with their contract management teams to ensure agreements do not change substantially over time. That can be challenging, particularly when those responsible for setting the con- tract, ensuring compliance and managing arrangements on an ongoing basis are from different departments. We would recommend that utilities invest a relatively small amount in gaining special- ist training now because a little will go a long way in terms of reducing the long-term risk of financial penalties. Liz Wilson-Lamb is manager of EU Services at Achilles EMissions Europe's emission targets will miss 2050 climate goals The European Commission's recently agreed renewable and emission targets for 2030 will miss its climate goals, according to an analysis by consultancy Ecofys. It found the proposed targets for 2030 are not in line with its aim to cut emissions by 85-90 per cent of 1990 levels by 2050. Ecofys said the proposals "will barely bring the EU on track for a fair contribution to limiting the global tempera- ture rise to below 2°". rEnEWablEs Solar same price as conventional power generation Solar power is now generating electricity at the same cost as conventional power genera- tion in Germany, Spain and Italy, according to analysis by consulting firm Eclareon. However, "poor regulation" in Spain is said to be hindering the self-consumption market. rEnEWablEs Call for renewables target as Ukraine energy crisis looms EU leaders have called for a pan-EU 2030 renewables target as member states seek energy alternatives to boost security of supply. José Manuel Barroso, president of the European Commission, said the target was vital in securing independence from fossil fuel imports. Concerns over Europe's energy security have mounted with Russia's annexation of Ukraine's Crimea region. About a tenth of Europe's gas supplies comes from Russia via Ukrainian pipelines. Briefs

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