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SSE Enterprise – PFI Relationship Realignment

SSE has a Street Lighting agreement with a local authority. It was originally operated under a PFI agreement but SSE sold its interests in the SPV and now operates as a sub-contractor. The agreement overall has been operating since March 2006 and is for a 25–year term – but it is not without its challenges. 

SSE approached BPG for advice and guidance on how they could improve their relationship with their client. BPG was advised there had been extensive work put into the relationship by the internal SSE team to improve the outcomes, some aspects of these efforts had been successful. However, the contractual arrangements had a number of ambiguities that are making it very challenging to keep the relationship positive and commercially viable.  

BPG were instructed to undertake a review of the following areas of concern to SSE and provide opinion, advice and recommendations for resolution: 

  1. “Reach Back”: how this is applied by the Authority when an issue is discovered and has remained outstanding for some time.  
  2. Proactivity – To what degree SSE has express or implied responsibilities to be proactive when undertaking installation and/or remediation works and how these impact the reach back provisions. 
  3. Service Defaults: Using expert witness experience to identify the degree to which Service Defaults could be practically penalised.  
  4. Contract Drafting Ambiguities: how these can be interpreted fairly for both SSE and the Authority.  
  5. Dispute Resolution Process: whether DRP can support or detract from the overall objectives of both SSE and the authority in successfully taking the relationship to the next stage 
  6. Monthly Monitoring Reports: regarding contractual requirements for the production of monthly monitoring reports and how the process should be aligned to the time requirements 
  7. Asset Register Verification 

PFI Relationship Realignment Activity & Outputs 

We reviewed the contract, schedules, apposite documentation and undertook interviews with SSE representatives. We assessed the information gathered against our legal experience, operational and situational knowledge of PFI agreements of this type. The outputs of our instruction included providing a report on the above and developing a relationship remediation strategy outlining what dialogue was needed between SSE and the local authority.