DD2502 - Royal Docks Electricity Reinforcement – Professional Fee

1.1.    The Royal Docks is one of London’s most distinctive economic locations and largest regeneration projects, with the potential to deliver 60,000 jobs and 25,000 homes over the next 20 years. All the key development sites across the Royal Docks will require significant electricity supplies to enable their development. To secure these supplies the developers are reliant on the local distribution network. 
1.2.    The GLA commissioned Aecom in 2018 to produce a capacity review of this network.  It concluded that there was insufficient capacity to accommodate future development demand across the Royal Docks. Therefore, significant power reinforcement work was necessary to unlock future growth. Aecom’s capacity review proposed that this could be delivered in part by a new primary sub-station and high voltage connection at Gallions Reach. In December 2019, AECOM (on behalf of the Royal Docks Team) submitted a formal request to UK Power Networks (UKPN) for 88MVA of capacity, representing the Royal Docks medium-term development needs.
1.3.    Mayoral Decision (MD) 2338  approved expenditure of up to £212.5 million for the five-year Royal Docks Enterprise Zone Delivery Plan to deliver an integrated and catalytic package of projects under the strategic objectives of Place, Connectivity, Economy, Activation and Promotion. The LEAP Board endorsed the Royal Docks EZ Delivery Plan in June 2018. A budget of £97.5 million within the Delivery Plan is allocated to Connectivity projects, which included an allocation for this project.
1.4.    MD 2655  approved expenditure of up to £25.218 million investment to fund the GLA’s contribution to these electricity reinforcement works in collaboration with UKPN. The expenditure will be funded from the Connectivity Theme of the Delivery Plan as set out in MD2338. This investment will provide a major piece of electrical infrastructure in the Royal Docks, delivering a new primary sub-station to reinforce electrical capacity and meet growing demand.
1.5.    UKPN will be responsible for upgrading the existing distribution network to accommodate demand, provide a new high voltage cable route to the Royal Docks, as well installing the necessary infrastructure inside the new primary sub-station (as set out in their connection offer dated 1st April 2020 ). They will be responsible for all associated infrastructural improvements to connect the substation to the local distribution network.
1.6.    The GLA will be responsible for achieving a successful planning consent for the primary sub-station building, construction of its structure, including associated site enabling packages, highways improvements and landscaping works. 
1.7.    The terms of the agreement between the GLA and UKPN are subject to ongoing negotiations including the development of an appropriate land disposal model and commercial agreements. Negotiations are underway with UKPN and our legal/technical advisors to develop the most advantageous arrangements open to the GLA. This is in addition to preliminary site surveys, constraints mapping, and feasibility surveys conducted by Aecom and Architectural consultants.
1.8.    MD2655 delegated authority to the Executive Director for Housing and Land the authority to make all decisions in relation to further GLA investment in this project.
1.9.    This Director’s Decision (DD) therefore seeks approval to draw down £850,000 from the £25.218 million budget approved by Mayoral Decision MD2655 to cover the above activities. Expenditure will be used as follows (all figures indicative):

1.10.    All further decisions in relation to GLA investment in this project, as well as the terms of legal negotiations with UKPN to develop an appropriate land disposal model and commercial agreements, will be approved by the Executive Director for Housing and Land as delegated under MD2655.

2.1.    The objectives of this work are to ensure: 

•    That a robust and detailed design is developed in line with UKPN technical specifications and GLA aspirations for a high quality and locally responsive building; 
•    A detailed planning application is submitted to secure planning consent for the required works;
•    Increased certainty to development partners on the availability of power to the Royal Docks, helping them to plan for growth and investment into the OAPF area; and
•    Detailed negotiations with UKPN continue on the terms of the agreement between the GLA and UKPN, including the development of an appropriate land disposal model and commercial agreements.
2.2.    The expected outcomes of this work are: 

•    Securing planning consent for a high-quality new piece of infrastructure in support of reinforcing the local areas electricity network;
•    Developing the technical documentation required for tendering the works contract;
•    Delivering against GLA responsibilities for the design and construction of the substation;
•    Finalising detailed negotiations on the terms of legal agreement with UKPN to develop an appropriate land disposal model and commercial agreements.
•    Facilitating and enabling the long-term success of the Royal Docks by supporting the Enterprise Zone (EZ) Delivery Plan through a catalytic package of connectivity projects that will help to deliver the cohesive transformation of the Royal Docks and accelerate the delivery of new EZ commercial space, homes and jobs.
 

3.1.    Under Section 149 of the Equality Act 2010, as a public authority, the GLA must have ‘due regard’ of the need to: 
•    eliminate unlawful discrimination, harassment, and victimisation; and
•    advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not.

3.2.    The proposed electricity upgrade is not expected to have any impact on those with protected characteristics as it will merely expand the existing network and will support the provision of more electricity. However, improvements in power supply will allow for the delivery of additional housing (including affordable housing) and employment opportunities across the Royal Docks Enterprise Zone, leading to improvements in housing and job opportunities for all, including those with protected characteristics. 
3.3.    The design of the electricity substation shell and the associated public realm will be subject to review to ensure that it does not have any negative impacts on those with protected characteristics. 
 

Key risks and issues
4.1.    Key risks associated with this approval are as follows:
•    Programme – The current programme for energisation of the substation is 2025. These timescales may have knock on effects to development timelines for the Royal Docks and impact developer confidence. We are working with UKPN to see how these timescales can be reduced and are working at pace to secure the design team for the GLAs works obligations.
•    Design Team – Procuring a design team that can deliver against both the technical requirements of UKPN’s specifications and the GLAs aspirations for a high quality and contextually responsive design. A robust procurement exercise will be conducted to appoint an appropriately resourced and experienced design team that can deliver against these requirements.
•    Legal Negotiations & Commercial Model – The terms of the agreement between the GLA and UKPN are subject to ongoing negotiations including the development of an appropriate land disposal model and commercial agreements. This includes formulating a cost recovery structure from developers on a proportionate and equitable basis as development occurs. The Royal Docks Team is receiving advice on the appropriate mechanism to do so; however it is unlikely that costs will be recovered in full. The model is not sufficiently developed for inclusion as part of this approval and will be presented for agreement as part of future Director’s Decisions.
•    Power Ringfencing – Under the terms of the Regulations, power supply will be reserved for a period of 12 months following completion of the works. However, UKPN has indicated that the 88MVA secured by the Royal Docks may be ringfenced beyond this period in accordance with the schedule of development provided as part of the connection offer, as such this will be investigated further. Any bespoke agreements will be captured through Heads of Terms and associated agreements. These will be presented for agreement as part of future Director’s Decisions.
•    Cost Liability – Cost liability is not capped under UKPN’s standard terms and conditions. However, it is considered that sufficient contingency has been included in the funding envelope under MD2655 to account for any cost overruns. Current costs are however indicative and subject to detailed design and site investigation. The Royal Docks Team will work with UKPN to ensure robust mechanisms and processes are in place to manage cost overruns and ensure value for money, as well as work with the Design Team to secure the most commercially advantageous design.

Link to Mayoral strategies and priorities

4.2.    The site will support Mayoral commitments to grow the numbers of new high-quality and genuinely affordable homes, promote new educational opportunities, as well as generate employment, commercial benefit and local social value.

4.3.    This project will therefore support the implementation of a number of the Mayor’s policies such as the Intend to Publish London Plan, A City for All Londoners, Healthy Streets Approach, the Mayor’s Transport Strategy, London Housing Strategy, London Environment Strategy and is aligned with the Mayor’s Equalities Framework to consider the requirements of relevant equalities groups.

Consultation and impact assessments
4.4.    Consultation with development partners across the Royal Docks has taken place to establish the power requirements identified and which informs UKPN’s connection offer. Further consultation will also be undertaken in the design of the substation shell and associated public realm as well as through the associated planning permission. Relevant internal and external stakeholders will be consulted, including local residents, the London Borough of Newham, local schools and education providers, development partners and organisations undertaking activity in the area.
4.5.    The project will have due regard to data protection, health and safety, and safeguarding where relevant.  

Conflicts of interest

4.6.    There are no conflicts of interest to declare for the officers involved in the drafting or clearance of this decision.
 

5.1.    This decision requests approval for up to £850,000 expenditure to be incurred over years 2020/21 and 2021/22 to fund a design team to undertake detailed design and secure planning consent for the new sub-station, as well as associated site investigations and ongoing legal negotiations with UKPN.

5.2.    This expenditure will be funded from the Connectivity Theme of the Delivery Plan as set out in MD2338 which approved a total spend of £212.5m.  MD2655 approved a spend of up to £25.218m capital expenditure to fund the GLA’s contribution to the electricity reinforcement works, and this £850,000 funding request is from the £25.218m approved in MD2655.
 

6.1.    The foregoing sections of this report indicate that the decisions requested of the director fall within the statutory powers of the Authority to promote and/or to do anything which is facilitative of or conducive or incidental to economic development and wealth creation and social development within Greater London and in formulating the proposals in respect of which a decision is sought officers have complied with the Authority’s related statutory duties to:
(a)    pay due regard to the principle that there should be equality of opportunity for all people;
(b)    consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom; and
(c)    consult with appropriate bodies.
6.2.    In taking the decisions requested of him, the director must have due regard to the Public Sector Equality Duty; namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010, and to advance equality of opportunity between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion or belief, pregnancy and maternity and gender reassignment) and persons who do not share it and foster good relations between persons who share a relevant protected characteristic and persons who do not share it (section 149 of the Equality Act 2010).  To this end, the director should have particular regard to section 3 (above) of this report.

6.3.    Officers must ensure that any external services required for the project be procured in accordance with the Authority’s Contracts and Funding Code (the “Code”) and with the assistance of Transport for London’s procurement team.  Furthermore, officers must ensure that appropriate contractual documentation be executed by both the Authority and the relevant contractor prior to the commencement of the required services.
 

7.1.    A

n indicative programme of activities is set out below: