Energy Suppliers, Communal Energy Supplies, and Credit Problems

If you live in a block of flats and pay a service charge bill for communal electricity and gas supplies, you may be unaware that yours or your managing agents’ choice of supplier and rate paid can often be severely limited by both the payment method used to pay the bills and the credit perception of the contracting party.

Whilst this is not necessarily a problem for individual residents’ supplies, it can be a serious problem for the supplies to communal areas which are typically classed as business supplies. More and more business energy suppliers simply do not offer prices to customers paying by BACS or cheque, and with direct debit being a less common means of paying for communal costs, options can be limited. Increasingly, such positions are even being adopted by the ‘Big 6’, not just the more-cautious new or independent suppliers.

Added to this is the further hurdle many RTM companies and freeholders face of having unknown or ‘non-trading’ statuses held with the commercial credit agencies that suppliers use to assess potential customers. Whilst it is entirely to be expected that this could and indeed should be the case in this sector, many suppliers have a simple ‘black and white’ understanding of company status and may seek to apply credit premiums or security deposits where credit ratings are unknown (or otherwise try to insist on direct debit which may itself be a non-starter).

What is the solution?

If payment can be made by direct debit, this is usually sufficient to gain access to prices across the whole market, even if a credit score is unknown. In such cases we would tend to recommend suppliers offering quarterly or variable direct debit to the bill value along with regular meters reads so bills can be monitored, and avoiding those suppliers who will only offer a fixed monthly budget scheme. Smart meters can often help but that is another topic in itself !

Another possible way around the situation is for a managing agent to assume legal responsibility for the supply contract, although this itself can present a problem if changing managing agents as any change of contracting party will void an existing contract – a problem in a rising market. That said we do often come across accounts set-up this way, be it out of convenience, or carelessness.

Are there other options?

With many years’ experience in this sector, Thames Utility Brokers have a deep understanding of the factors influencing energy supplier credit decisions and have built strong relationships with account managers at the supply companies. We have identified suppliers that understand the sector, providing favourable prices and payment methods, so long as creditworthiness can be proven. In 20 years, not one of our clients in this sector has paid a security deposit, and this includes clients who have been threatened with them out-the-blue mid-contract !

In addition, when dealing with larger tenders for communal gas supplies, or in blocks which have higher electricity demands and half-hourly metering, we ensure that credit checks are carried out in advance of offers being provided. It may seem obvious, but most suppliers and consultants unfamiliar with the sector will not insist on this. In our experience it is essential to avoid scenarios where time-sensitive offers can be lost through a delay in credit checking a new application.

 

For help with any of the above issues, to review your costs, or for general advice with any other supplier issue, please do not hesitate to contact Neil Woolfson at Thames Utility Brokers on 020 3006 3056 , info@thamesutilitybrokers.com

Reviewed: July 2019