Worked example
Worked buying file: an eight-school academy trust
Follow a fictional trust through an above-threshold exercise, a fixed-versus-pass-through comparison and the evidence for an alternative to approved arrangements. The calculation and the judgement remain separately visible.
Fictional evidence, with explicit assumptions
FICTIONAL WORKED EXAMPLE. Every school description, supplier, offer, response, quotation timestamp, approval and result in this dossier is invented for teaching. No real school, supplier offer, approved deal, interview, live tariff or professional sign-off is represented.
One trust contracts for eight academies. The electricity requirement is 2,000,000 kWh annually over three years, 365 days per year, with no extension option. Aggregate standing charges are £40/day and the direct TPI service fee is £6,000/year. The teaching calculation separates 5% VAT on qualifying supply from 20% on direct TPI fees.
For this normalised teaching comparison, electricity supply is assumed to qualify for 5% VAT in a period after temporary relief has ended; direct TPI service fees are separately assumed to carry 20% VAT. No actual supply dates, eligibility ruling or school tax status are represented. A real comparison must apply the documented treatment to each charge and date, including any temporary electricity relief and mixed use. Do not copy the illustrative supply assumption into a live decision.
This is an example of the evidence a decision needs, not a specimen legal approval or a real proof that an alternative has met DfE’s equivalent-value requirement. The trust must establish its actual route and evidence with suitable professional input.
Completed scope and authority record
| Item | Fictional completed record |
|---|---|
| Accountable buyer | The trust is the customer for the eight sites. Delegated academy budgets do not produce eight separate threshold calculations. |
| Evidence pack | Meter-by-meter demand, valid identifiers, invoice history, interval data completeness and current commitments are reconciled. A trust-level forecast explains site changes and excludes assumed demand reductions that lack a supported start date. |
| People | CFO owns affordability and the recommendation. Procurement lead owns procedure and records. Estates lead validates demand. Trustees set risk appetite and delegation. A named authorised officer accepts the final evaluated agreement. |
| Risk objective | Budget tolerance is limited. The trust wants a documented view of remaining variable exposure, service responsibilities and site-change terms. No objective promises buying at the market bottom. |
| Adviser | One TPI is appointed through the appropriate separate process. Its school-facing service, full remuneration and restricted quotation authority are recorded. |
Route and market-access record
The documented estimated commitment is above the relevant general goods-and-services threshold. This fictional trust chooses a properly designed open procedure for its non-approved supply alternative. It completes the relevant procurement documents, supplier clarification process, assessment, notices and any applicable standstill before award. The companion route playbook identifies those milestones; three informal broker offers alone do not execute that procedure.
The declared TPI panel produces complete A and B bids. A third panel supplier declines the required credit terms and another cannot support the full meter portfolio; the register retains both reasons. Independently contacted supplier C submits through the same disclosed competition and comparable timetable. No supplier receives unpublished information or a late opportunity unavailable to others. The TPI’s panel is not described as a statutory framework.
Completed three-offer cost comparison
A’s specified 25p rate includes a 0.2p uplift. B prices the commodity at 23p, already including its 0.2p broker uplift, with an additional pass-through estimate of 2p. Thus B’s base variable total is 25p. C’s direct 25.3p offer is evaluated with the same standing and £6,000 service allowance. These rates are entirely invented.
| Annual amount before tax | A / specified fixed elements | B / pass-through base | C / direct check |
|---|---|---|---|
| Commodity and included fee | £500,000.00 | £460,000.00 | £506,000.00 |
| Additional pass-through estimate | £0.00 | £40,000.00 | £0.00 |
| Aggregate standing | £14,600.00 | £14,600.00 | £14,600.00 |
| Direct TPI service fee | £6,000.00 | £6,000.00 | £6,000.00 |
| Annual total before tax | £520,600.00 | £520,600.00 | £526,600.00 |
| Annual supply VAT / assumed 5% | £25,730.00 | £25,730.00 | £26,030.00 |
| Annual direct-fee VAT / assumed 20% | £1,200.00 | £1,200.00 | £1,200.00 |
| Annual total including component VAT | £547,530.00 | £547,530.00 | £553,830.00 |
| Three-year total including component VAT | £1,642,590.00 | £1,642,590.00 | £1,661,490.00 |
The variable-charge test changes the discussion
At a 3.5p rather than 2p pass-through charge, B’s additional supply charge becomes £70,000 annually. Its total rises to £550,600 before tax, £30,000 above the base each year. Supply is then £544,600, with £27,230 assumed supply VAT; the £6,000 direct fee carries £1,200 VAT. Annual gross is £579,030. If this scenario persisted for three years, B’s gross total would be £1,737,090, £94,500 above A’s base gross total. This is a stress assumption, not a prediction.
The trust also tests a lower pass-through outcome rather than presenting only a scenario favouring fixed pricing. At 1p, B’s annual total becomes £500,600 before tax, with £494,600 supply, £24,730 supply VAT and the £6,000 fee plus £1,200 fee VAT. Annual gross is £526,530 and three-year gross is £1,579,590, £63,000 below A. The board records the trade-off: A fixes specified rate elements, while B retains opportunities and risks. Exclusions and change clauses still need review under A.
An approved-route comparison without inventing certainty
The fictional evidence folder contains an illustrative approved-route comparison labelled D. Its supplied central annual supply estimate is £514,600 before tax for the same portfolio and period assumptions. An independently specified £6,000 annual validation and reporting service is added to normalise scope, giving £520,600. The source material, date and assumptions are retained. D is a teaching comparator, not an actual Energy for Schools quote or a claim about its current service content.
Under the same teaching assumptions, the £514,600 supply has £25,730 VAT and the £6,000 direct service has £1,200 VAT, producing the same £547,530 central annual gross figure as A.
D’s variable purchasing basis means its eventual cost is not fixed by this central estimate. The evaluator records historical benchmark results separately from forward indicative assumptions and explains lower and higher outcomes. The trust’s written judgement considers price, duration, service and risk. It does not convert a historic benchmark into a firm future price, or assume fixed pricing automatically satisfies equivalence.
The four-part alternative-deal file
| Record | Fictional completed outcome |
|---|---|
| Route comparison | A and the illustrative approved-route D are compared using the same eight-site demand, service scope and stated time basis. Different certainty is explained. |
| Written evaluation | Base costs match after the stated normalisation; A’s defined rate certainty fits the recorded risk tolerance. B can be cheaper or dearer under disclosed pass-through scenarios. C is £6,000/year dearer before tax. |
| Recommendation and governance | CFO recommends A subject to procedure completion and confirmation of all outstanding contract conditions. Trustees record the rationale, conflicts, authority and residual risks. |
| SRMSAC evidence | The responsible finance owner indexes the comparison, source documents, evaluation, governance minute and relevant declaration evidence. No declaration is fabricated by this illustration. |
Fees, valuation and the specimen recommendation
A and B each disclose 0.2p embedded remuneration: 2,000,000 × 0.2p ÷ 100 = £4,000/year, or £12,000 over the base term. This is already inside their rates, alongside the separately shown direct TPI service fee. The board sees total expected remuneration and its purpose without adding embedded fees twice. Direct TPI fees total £18,000 over three years, so total base remuneration is £30,000 before tax for either A or B. The independent C supply has no embedded broker uplift; any separately commissioned service remains visible.
A’s base three-year gross cost is £1,642,590, with supply and direct-fee VAT calculated separately. The worked valuation record uses 2,200,000 kWh per year as its maximum expected quantity scenario, based on a stated 10% allowance. A would then cost £570,600/year before tax: £564,600 supply and £6,000 direct fees. Supply VAT at the assumed 5% is £28,230; direct-fee VAT at 20% is £1,200. Annual gross is £600,030 and the three-year estimate is £1,800,090. No extension is assumed. Revisit the estimate when requirements change; it is not a cap on consumption.
“Recommend fictional A because the normalised central comparison supports the required service and the trust’s recorded affordability preference for specified rate certainty. Retain the assessed alternative-deal rationale and rejected options. Proceed only after the procurement lead confirms the applicable procedure, notices and standstill are complete, and final terms match the recommendation.” The example demonstrates a reasoned record; an actual trust must substantiate its own conclusion.
The first invoice and contract-life dashboard
For a 30-day aggregate period with 160,000 kWh, A’s expected supply invoice before tax is £40,000 energy + £1,200 standing = £41,200. At the teaching 5% supply VAT, that is £43,260 gross. The separate direct TPI invoice is £500 plus £100 VAT at 20%, or £600. The combined expense is £41,700 before tax and £43,860 gross. A duplicate £500 service line on the direct-fee invoice creates a £500 before-tax, £600 gross exception. The trust challenges the duplicate and closes it only after reconciliation.
The monthly dashboard records data completeness, trust and site-level kWh, accrued and billed costs, open queries and supplier/TPI responses. Keep billing corrections, tariff changes and usage reductions separate. Review service deliverables and planned portfolio changes quarterly. Retain a trust-owned data export and start the next buying exercise early.