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- Utility Procurement Case Study - Cobalt Park
Cobalt Park, North East
savings via a joint service arrangement
When Highbridge Properties acquired one of the North East’s most important pieces of development land in 1998, it promised to bring prosperity and thousands of jobs to
the reclaimed mining site on the outskirts of Newcastle.
Seven years on Cobalt Park is a 2.25 m sq feet success story occupied by major organisations such as Orange, Fujitsu, Procter and Gamble, LS Trillium, Equinox and De Vere Hotels, a shining example of an exemplary public-private sector partnership.
However, it was not all plain sailing at Cobalt, which can be found next to the A19, just minutes from the Tyne Tunnel. As Highbridge Director Piet Pulford recalls, organising the supply of the 15MVA of power required for the site proved far from straightforward.
“Initial soundings from the local electricity distributor Northern Electric suggested that we were looking at a bill of between £2m and £2.5m, although these are only estimates as, throughout the process, we never actually received an official quotation from them.
“The problem for us was threefold. Firstly we were being asked to pay to upgrade the local infrastructure for everyone’s benefit, not just for Cobalt and, as we were already making a significant investment in the site, that just didn’t seem fair.
“Secondly, and most shockingly, we discovered that even if we paid to upgrade the infrastructure, there would be no guarantee that supplies would remain available to us in the future, as the regulations stipulate that the local electricity company would have to make power available to anyone who asked for a supply, which could leave Cobalt Park high and dry”.
“Finally, if this circumstance came to pass, we would not be entitled to any recompense and may even be asked to make further investments in additional infrastructure in future years.
“Our difficulty with this situation was that it appeared to be placing hurdles and inequities in front of us when we felt entitled to expect support and flexibility as we were taking considerable risks at this early stage of the development. Highbridge had already paid to bury some electricity cables on the site in order to remove some pylons and open up the land for development.”
In response, Highbridge then began exploring other potential sources of power supplies including looking into how the company could become a power supplier itself, taking advantage of the recent de-regulation of the industry.
Fortunately, Cobalt Park sat close to a National Grid supply point, which opened up the possibility of the introduction of competition with the incumbent electricity company.
Scottish and Southern Energy was already supplying power to a nearby semi-conductor plant now operated by Atmel Corporation and saw this as an opportunity to secure long-term distribution rights for what is planned to be the largest out of town office park in the UK.
Highbridge felt that Scottish and Southern’s team were innovative and entrepreneurial in their approach. The result was that Scottish and Southern entered into a joint service arrangement for Cobalt Park and Atmel. This met Highbridge’s needs, whilst providing Scottish and Southern with a stake in a key geographical territory and thus improving the power supplier’s prospects of winning further business in the area.
Summing up, Piet Pulford says, “People should always have a choice because out of competition comes innovation, competitive prices and a ‘can do’ approach which can only be healthy for customers like us.
“We liked Scottish and Southern’s entrepreneurial approach because it chimed with our own. We understand the need for some level of regulation within the utility sectors but there must be a common understanding that, for ventures like Cobalt Park to attract investment, jobs and prosperity, it is in everyone’s interests to create a flexible and innovative environment.”
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