Advice required please: Standing charge for communal electric - can this be right???

Pipeandslippers20

Hi All
I'm a director of a management company and I've just been given copies of invoices etc.
I've sent the below email to the energy Ombudsman to ask for some advice. I am not able to discuss the account directly with the energy company due to the data protection act (only the property manager can).

Details below, but in a nutshell we're being charged a lot of money for a standing charge resulting in the overall cost per unit of electricity being over 3 times that of a domestic equivalent.

I know the standing charge is for the maintenance of the meter, but it is right next to my own meter and exactly the same apart from the number on it. I pay no maintenance for mine, we have paid £458 per year for standing charges for 2 meters in total. Can anybody shed any light on whether we’ll just have to accept it’s a rip off and morally wrong or if we have been potentially vastly overcharged please?
Good afternoon,

I am making an enquiry as a director of a management company.
Upon studying our accounts and invoices it has become apparent we are paying an extortionate amount for our electricity as a management company for our communal areas compared to domestic use.

I wish to find out more about what a ‘standing charge’ is and typically how this amount would vary.
The situation, in brief is explained below:
A personal electricity bill was £1071.04 for an amount of 11583 kWh. This equates to 9.25p per kWh. The standing charge was £58.22 for the year.
The bill for the management company (which I assume is on a business tariff and not an domestic one) was £3111.60 for an amount of 10239kWh. This equates to 30.38 pence per unit (including the standing charge).
We have had the figures (costs) and the reading ratified by our managing agent. It is surely wrong that for the communal areas in an apartment block that the business electricity is used costs over three times the amount of the domestic product? There is no tariff detail listed on the bill.
I have today read on this website http://www.adviceguide.org.uk/index/your_world/gas_and_electricity/electricity_supply.htmthe following text “The standing charge is a fixed daily amount charged to electricity users, regardless of how much electricity is consumed. There are different charges for credit and prepayment meters.
Your electricity supplier may offer you the option of not paying a standing charge, but paying a slightly higher rate for the electricity used instead. You would need to work out, from your bills, whether this option would be cheaper for you.”
Interesting was the text I have marked bold. We also have a bill for some street lamps on a private road of approx £550, but only approx £104 of this was for electricity, the rest was for a standing charge.
Do these figures for the proportion of the bills made up by the standing charge appear to be about normal? Or does it appear that there is a mistake in the bill perhaps? We have nothing to gauge these figures upon.

spiro

Firstly the Ombudmans will do nothing until a complain has been raised with the supplier and the outcome know.

Now onto the other points:
1) You, on your own bill, will be paying a standing charge but it is 'hidden' as the difference between the teir 1 and 2 prices times the number of tier 1 units per quarter, however businesses normally pay more as they expect a higher level of service if things go wrong (i.e. meter fault).
2) If you are on a business tariff and a contract has not been negotiated or has lapsed the supplier will automatically put you on a contract (12 month or more) at the basic (most expensive) price. This will almost certainly account for your high prices. All business contracts are done on a one by one basis not like domestic.
3) I think the link you have included is about domestic supplies and different rules apply.

Pipeandslippers20

spiro wrote: »

Firstly the Ombudmans will do nothing until a complain has been raised with the supplier and the outcome know.

Now onto the other points:
1) You, on your own bill, will be paying a standing charge but it is 'hidden' as the difference between the teir 1 and 2 prices times the number of tier 1 units per quarter, however businesses normally pay more as they expect a higher level of service if things go wrong (i.e. meter fault).
2) If you are on a business tariff and a contract has not been negotiated or has lapsed the supplier will automatically put you on a contract (12 month or more) at the basic (most expensive) price. This will almost certainly account for your high prices. All business contracts are done on a one by one basis not like domestic.
3) I think the link you have included is about domestic supplies and different rules apply.

So, if we have indeed been put on the most expensive rate would it be fair to say that our managing agents have let us down. I say this because they have a team or section that ensure that we get the best deal.
My suspision is that the charges are technically correct, but morally wrong.

Cardew

As said above, business accounts are considered 'fair game' by all the utility companies and unless you keep on top of the situation you are frankly scammed.

My experience with managing agents is that they have no incentive to get you the best deal - they normally charge a mark-up of x% on the total expenditure. On a flat I owned in a complex in London we bought the freehold and sacked the managing agents and appointed a owner(on a salary) to manage. In a few months she had re-negotiated all of the contracts - Utilities, lift maintenace, security, cleaning etc and literally halved the costs.

Pipeandslippers20

Cardew wrote: »

As said above, business accounts are considered 'fair game' by all the utility companies and unless you keep on top of the situation you are frankly scammed.

My experience with managing agents is that they have no incentive to get you the best deal - they normally charge a mark-up of x% on the total expenditure. On a flat I owned in a complex in London we bought the freehold and sacked the managing agents and appointed a owner(on a salary) to manage. In a few months she had re-negotiated all of the contracts - Utilities, lift maintenace, security, cleaning etc and literally halved the costs.

That would be a good idea if there wasn't only 12 of us.

Pipeandslippers20

spiro wrote: »

Firstly the Ombudmans will do nothing until a complain has been raised with the supplier and the outcome know.

Now onto the other points:
1) You, on your own bill, will be paying a standing charge but it is 'hidden' as the difference between the teir 1 and 2 prices times the number of tier 1 units per quarter, however businesses normally pay more as they expect a higher level of service if things go wrong (i.e. meter fault).
2) If you are on a business tariff and a contract has not been negotiated or has lapsed the supplier will automatically put you on a contract (12 month or more) at the basic (most expensive) price. This will almost certainly account for your high prices. All business contracts are done on a one by one basis not like domestic.
3) I think the link you have included is about domestic supplies and different rules apply.

I have contacted my supplier and have received quotes for the supply as presently existing i.e two meters and a consumption of 10239 Kw/Hrs. They have qoted me a price of 9.32 pence per unit as against E.On price of 16.15 primary and 13.83 secondary. The standing charge would be 16 pence per meter per day,

I have worked out that if we had ben charged at this rate then the 10239 Kw/hrs would have cost us £1002 Including VAT at 5% - and the standing charge would have been for 636 days £106.8 per meter or £213.7 total. So the total cost for the period should have been no more than £1215.7.

This is £1896 less than charged by E on.

I think there are two possibilities here. Either (a) the bill is wrong, or (b) the managing agent did not negotiate the best deal (despite having a specialist team that negotiate for the best energy and insurance prices) and therefore they have been incompetent.
Quote above is for the first company I rang and the saving is 61%..

Premier_2

davidandrewlawrence wrote: »

Hi All
I'm a director of a management company ... I am not able to discuss the account directly with the energy company due to the data protection act (only the property manager can)...

Who manages the property then if it's not the management company of which you are a director? :huh:

To answer your particular question, you have to pay according to the tariff agreed.
You need to shop around. Business tariffs for SMEs can be competitive (i.e. within about 10%) to the best of the domestic tariffs. Clearly you are not currently on a competitive tariff for communal usage.
(Be aware that switching supplier as a business user is not as easy as a consumer - notice periods must be adhered to)

Pipeandslippers20

Premier wrote: »

Who manages the property then if it's not the management company of which you are a director? :huh:

To answer your particular question, you have to pay according to the tariff agreed.
You need to shop around. Business tariffs for SMEs can be competitive (i.e. within about 10%) to the best of the domestic tariffs. Clearly you are not currently on a competitive tariff for communal usage.
(Be aware that switching supplier as a business user is not as easy as a consumer - notice periods must be adhered to)

Directors of the management company employ a management agent. The managing agents manage the day to day items. The fee paid to them is for such things as negotiating the best energy deals..

Premier_2

davidandrewlawrence wrote: »

Directors of the management company employ a management agent. The managing agents manage the day to day items. The fee paid to them is for such things as negotiating the best energy deals..

But whose name is the electricity account in?

Normally it would be in the name of the management company c/o the managing agent's address.

If it's in the name of the managing agent, don't worry about it. Tell them to sort their own bills out (they would be entirely responsible for it)

Pipeandslippers20

Premier wrote: »

But whose name is the electricity account in?

Normally it would be in the name of the management company c/o the managing agent's address.

If it's in the name of the managing agent, don't worry about it. Tell them to sort their own bills out (they would be entirely responsible for it)

its in the name of the management company, not the agent. It's care of the agent. And if there's an overspend on the budget, residents pay. Books must be balanced. Should be interesting, will keep you posted..

Premier_2

davidandrewlawrence wrote: »

its in the name of the management company, not the agent. It's care of the agent. And if there's an overspend on the budget, residents pay. Books must be balanced. Should be interesting, will keep you posted..

Well as you are the director of the management company, then surely it is you who the supplier should be speaking with?

You can, of course also give permission for the supplier to speak with your agent, but without that they should only be discussing it with your company.

I'd remind thee supplier of what their real obligations are under the DPA which they want to hide behind