Blog post 006 – 07.03.2024
Standing Charge reform?
In our latest blog post, we look at the current discussion around #standingchargereform and how likely it is changes will be made to how #energysuppliers implement fixed charges as part of our energy bills and will it lower the costs.
Its fair to say that over the last couple of years, the average UK household and business have seen their energy spend go through the roof.
This was mostly caused by spiralling unit rates as a result of the energy crisis.
Alongside this was the somewhat silent killer known and standing charges, which previously had made up a very small % of total energy spend and while still minor in comparison to unit rates, for a lot of people this is now making up a much more considerable proportion of their spend.
Its important to understand that standing charges are capped by the regulator (Ofgem). The standing or fixed charge is how we all pay for the infrastructure needed to deliver energy safely to our homes and businesses.
Firstly, lets look at what standing charges are for:
- The vast majority (circa 80%) of the fixed cost you pay as a standing charge is operational & network costs (billing, metering & cost of the energy network & infrastructure mainly)
- Smart metering (cost of rolling this out – still ongoing)
- Policy costs (Renewable obligations such as Green levy, solar panel recharge fees, warm home discounts etc)
- Covering costs of Suppliers that have gone bust over last 2 years (around 6%)
- Profit
Its estimated standing or fixed charges have risen by around 65% since 2019 when the Energy Piece cap was introduced with the aim of protecting the most vulnerable of our society.
The Committee on Fuel Poverty has recommended that Ofgem considers a tariff mandate as a replacement for standing charges in the energy sector.
What this would mean in effect is Ofgem would oblige suppliers to use data on energy use to put their customers on the best combination of unit rate and standing charge for their energy usage patterns.
I think most would agree this is a sensible and fair way to improve the way our energy bills are formulated.
However, any changes for the better are no more than a possibility and will likely take years to implement successfully. So in the meantime, expect standing charges to remain high regardless of where wholesale energy prices go.
Blog post 005 – 01.02.2024
Top 10 low cost tips to reduce utility bills in your properties.
In our latest Blog post, we look at the best ways you can reduce your utility bills as a landlord in 2024, without breaking the bank.
Reducing utility bills as a landlord, (particularly if you operate on a bills inclusive basis), not only benefits your bottom line but also makes your property more attractive to potential tenants.
The vast majority of co living/ HMO landlords will rent the rooms in their properties out inclusive of all utility bills (gas, electric, water, broadband). Therefore it is one of the most important areas to address when looking to make your business as profitable as possible.
Most landlords will have heard of solar panels, ground source heat pumps, air conditioning units and installing extra insulation as ways if improving energy efficiency.
While there is no doubt these are all great ways of reducing energy usage and therefore cost, each of the above require a hefty cash input in the outset, which many may not feel justified in spending.
Here are our top 10 tips to reduce your utility spend:
- Install LED bulbs
Probably the most obvious and cheapest way to reduce your electricity usage and very much a DIY option.
- Ensure Seals on windows & doors are in good working order
Often overlooked, but missing or faulty seals around windows and doors is a surefire way to waste energy, as heat will escape through any gaps, meaning the boiler will have to work harder to regulate the temperature in turn using more gas.
- Install sensor lights in the communal areas
Introducing sensor lighting in hallways and landings is another great way to reduce electricity usage. It eliminates the need for tenants to remember to turn off lighting.
Ideally this would be done during the initial refurbishment of the property for obvious reasons, and at this stage the cost difference compared to conventional lighting is hardly noticeable. PIR Motion sensors are the type we use in our shared & serviced accommodation properties.
- Install smart thermostats.
We personally use Inspire Ignite thermostat in our co living and serviced accommodation properties and highly recommend them. In short, it allows the operator to control the heating remotely via a smart phone app. Game changing!
- Work with a utility consultant.
Now we may be slightly biased, but using a consultant who should be an expert in the field, will absolutely save you time and money on your bills. They will not only source the most competitive tariffs to suit your needs, but also factor in market timing which isn’t always something most landlords would consider.
- Review your suppliers.
This links in with the above point, as this will likely be high on the list of to do for any worthwhile consultant, but even if you decide to go it alone, make sure you don’t just accept your current supplier as the automatic best option.
We’ve saved some our clients thousands just by doing an initial review of suppliers and contracts so make sure this is something you do regularly.
It’s not just a change of energy supplier that can bring savings – negotiate your with your broadband provider as new deals come online, boiler’s breakdown service contract rates, negotiate the rebuild cost of the house for insurance purposes and ensure all the policy info is up to date.
A lot of these rates automatically increase each year, but with a little bit of time spent (not necessarily by you) can be easily brought back down to current or even lower rates.
- Keep track of contract end date to avoid default tariffs.
Once again, if you decide to employ a consultant this is another essential thing they must do for you. While negotiating with suppliers for new deals at the beginning is important, its equally important they do this on an ongoing basis to ensure you don’t fall onto out of contract rates.
- Manage Appliance Use
We have experienced first hand how disastrous certain household appliances can be to your utility budget. The tumble drier is an absolute monster when it comes to electricity consumption so avoiding having these in your properties is advisable. If the tenants absolutely requite them, then certainly look at coin operated options.
- Apply fair use clauses into tenancy agreements.
Some may view this as controversial, but we have used them to good effect in our business and as long as they are fair and clearly set out from the outset, then they encourage energy efficiency and good tenant behaviours.
- Tenant Education
Last but certainly not least, in fact arguably the most important of these tips. If you communicate well with your tenants, particularly in the early days of their living experience with you, you can avoid a lot off the typical problem issues happening in the first place.
Blog post 004 – 21.01.2024 by Adam West
2024 Outlook for UK energy prices
It’s fair to say that after the mayhem which began in September 2021 and continued for the best part of 2 years, the second half of 2023 was somewhat unremarkable for the UK energy markets.
And the good (for most people) news is that the outlook for 2024 looks set to deliver more of the same.
While we have seen a slight increase to the price cap (the maximum price per kWh a domestic consumer can pay on a suppliers standard/ default tariffs), at the start of the year, most experts are predicting it will decrease in Q2 & Q3, before ending the year somewhere between 10-15% down on where they are today.
The price cap only effects domestic users on standard tariffs (which the majority of households have been paying in recent times).
While businesses are not protected by the energy price cap, it is usually a good indicator of where wholesale prices are heading across the board.
The main reason for the expected decrease, is UK and European gas storage levels are well above typical levels for this time of year, which has helped drive down wholesale prices.
Of course these are only predictions and the UK market is particularly sensitive to external factors.
Therefore prices could well rebound if global events, such as the Israel Hamas conflict lead to an increase in oil prices, thus driving wholesale rates higher
It’s also worth noting that even if the market does drop as expected, they would still be well above pre-‘energy crisis’ levels.
So in summary, while it seems as though prices may well fall in 2024, it is by no means a foregone conclusion.
With fixed rate contracts back on the table, it’s a matter of personal risk appetite as to whether you stick or twist.
Blog post 003 – 11.09.2023 by Adam West
Why use a Utility Consultant in your Property Business?
Using a utility management consultant can provide several benefits to busy landlords and property investors. In this latest blog we explore some of the key benefits:
Cost Savings: First and foremost, the most obvious benefit of using a utility consultant is reducing your utility spend. A good utility consultant should be an expert in analysing utility usage and expenses. They will be able to spot opportunities to reduce costs, through strategies like renegotiating contracts, implementing energy-efficient technologies, and optimizing utility usage patterns.
System Expertise: Utility management consultants have specialised knowledge and experience in utility systems, regulations, and best practices. They stay updated on industry trends and can provide valuable insights to improve efficiency and compliance.
Market Conditions and Timing: A good consultant will be able to offer advice and guidance in relation to wholesale market trends and how you should best procure your utilities for your business. For example if it is thought the market is likely to rise then they would advise fixing in advance.
Improved Sustainability: Consultants can assist in implementing sustainable practices and technologies that reduce your environmental footprint. This not only aligns with corporate social responsibility goals but can also lead to long-term cost savings through reduced energy consumption.
Time Savings: Equally as important to a lot of landlords – Managing utility operations can be time-consuming. By outsourcing this task to experts, your business can focus on its core activities, saving time and resources.
Negotiation Power: Utility management consultants can negotiate better terms with utility providers and suppliers, ensuring that you get the most favourable rates and contract terms.
Financial Transparency & Systems: Consultants can help you create a clear and transparent accounting system for utility expenses, making it easier to track costs, monitor usage patterns and allocate resources effectively.
Benchmarking: Consultants often have access to industry benchmarks and can compare your utility performance with other landlords with similar size portfolios. This allows you to gauge your competitiveness and identify areas for improvement.
In summary, utility management consultants offer valuable expertise, cost-saving opportunities, and tailored solutions to organisations looking to optimise their utility operations. By leveraging their knowledge and experience, you can enhance efficiency, reduce costs, and achieve your sustainability and performance goals more effectively.