Vital Energi plans big raise in heating bill for our housing development

Montywithnail

Hi

I bought a house in Woodbrook Eco village, Lisburn, N. Ireland just under 2 years ago. The development was a planned eco-village which would have a centralized heating system based on a biomass (wood chip) boiler house, which would in turn supply hot water and heating to the planned 350+ houses/apartments. Subsequently the developer has went into administration with only 170 of the houses finished. Due to this the boiler house is running at a loss.

Originally the developer, who is Carvill Group, where to meet any shortfall in the running of the heating system until the full amount of houses where built. This looks like it is not going to happen and the company who installed and operates the heating system is now wanting to charge considerably more on both heating an maintenance.

We received a letter from our management company yesterday detailing the following rises in costs. Currently the unit price is set at 3.5p per unit. They plan to push this up to 8.5p. The current maintenance fee we pay is £12 per month. This is to be raised to £30.50 per month. My maths isn't great but I think that translates as around 145% of an increase.

On top of this Vital appear to be owed a short fall from the past year or two that carvill group never paid. They are suggesting that unless they are given ownership of the site the heating centre is on, along with a long lease that they will pursue the management company (all residents are shareholders) for these costs. They failed to mention the exact amount only stating that they are considerable. Finally they also mention that if Vital Energi do not get their way that the heating could be turned off altogether. Not really a good time of year for this.

The biomass heating centre is in the deeds as a common area and changing to an alternative heating system appears to be a non starter for the moment.

So basically what I was wanting to find out is whether the management company and in turn the residents can be held liable for any of the shortfall amounts that where incurred by the developer.
Also whether the threat to turn off the heating system altogether would allow us the right to install our own.

Any advice at all would be a help.

Cardew

Welcome to the forum.

This isn't really a heating problem as such, but a situation that requires legal advice.

I doubt anyone here can offer any advice, especially as there are subtle differences in the Law in N Ireland.

Surely you have a Resident's Association and they can seek legal advice - or contact your local MP

diehardguy

Hi I live there too with my wife and son, I've done alot of investigation today with various avenues and we basically need to see the contracts between Carvill and Vital. As far as I am aware Carvill did not hand complete control to the management company yet which is evident from them being current directors. I am seeing a solicitor tomorrow, but if you want to chat about it message me through here and we can meet up. This isn't going to be something we can sort out individually and we should be going door to door.

fullylit

Hi I live in woodbrook too. Bit of a disappointing Christmas card! Im no expert on these matters but on my intial read of the correspondence I found some of the wording a bit flakey - "Apparently the carvill group had agreed to cover the additional costs of running the heating systems"... Has our management company got the hands on the contract? As diehardguy stated we would really need to see the contracts between Carvill and Vital, is there a seperate contract between the mangement company and vital also?

This thread may also be a good place to see what questions people have before the extra ordinary meeting on Tuesday.

Eamon252

Just be careful what the exact additional costs relate to. The management company should be able to give you an exact breakdown of there contract and monthly/annual account with Vital Energy. THIS IS YOU WHAT YOU PAY THE MANAGEMENT COMPANY MONEY FOR. THE MANAGEMENT COMPANY IS THERE TO GET YOU VALUE FOR MONEY FOR ALL ASPECTS OF THE COMMUNAL AREAS OF YOUR DEVELOPMENT. From reading your posts it seem as if the letter is very waffly, just be careful that the Mangemnet Company isnt using this as a excuse to increase there own revenue and profitability also. Management companies in there nature are only interested in making money for them selves and often go with the options that are more profitable for them as opposed to the resident. They also from experience tend to give residents as little info as possible in order to make as much money as possible for themselves.

Montywithnail

In the case of our management company that is very much the case. They are not at all forthcoming with info, so you basically need to chase them to get answers. We have a meeting with the management company regarding this on Tuesday evening so that should be interesting.

Cardew

I owned a flat in a large complex in London, and like most in London the Managing agents were a complete waste of time and had seemingly no incentive to get value for money. There were good grounds for suspecting that 'backhanders' from companies ensured they got the contracts for cleaning, lift maintenance etc etc(obviously could never be proved)

Anyway we finally got rid of them and employed one of the residents(and paid her a good salary). She cut our expenditure almost overnight by 40% and everything improved.

The point to make to the Managing Agents is their contract is not as fireproof as they would have you think! Put every complaint in writing - however trivial - and build up a case against them.

Eamon252

At your meeting with Management I believe you firstly make the managment company accountable, remember you have employed them, you pay there wages, and like any employer/employee situation if you feel they arent performing you can terminate there agreement and employ other to do the job. Ar your employee the managemnet company ahve a due to be totally honest and transparent. They should have accounts for every penny spent, backed up with all the paperwork form all of the contractors (ie Heating Opertation and Maintenance Guys, /Gardeners, Cleaners, even down to receipts for envelopes/ stamps etc.) If they cant provide this they are not doing there job, and I would have doubts about them. If they say it takes alot of time to put this tegether then alot of alarm bells should ring. Careful though as you can be rash with them and need a Plan B in place if you do get rid of them, as you development wont maintain itself. If there say for example 100 house in your scheme, I would advise that you set up a residents page on facebook. this page should be kept private with access only to the residents in you development. This is one a good way of getting to know ur neighbours, and also a good way of keeping abreast of the positive and negative aspect of your development. Remember keep it private as if the wider public hear there is alot of negativity in your scheme it will have a determinental effect on the price of everyones house, which is no good in the long run.

green8

We need to ensure that nothing substantive is decided at Tuesdays EGM re Vital until this been given due consideration based on full disclosure / analysis of all relevant information. There is a lot of mis-information at the moment.

The current cost of our energy is 7p/unit, not 3.5p. 20% rise after a few years is okay in the current climate. But this was a bad error in the CSM letter of 12/12/2011 (corrected in emails later the same night, but I am not impressed that CSM haven't posted a correction to all shareholders as I asked).

People will be seething or anxious. A critical mass of residents need to calm our shareholders meeting, then work at this together systematically. Should several of us should become directors of Woodbrook Management Company? Or can we do just as much "from the floor" as subscribers.

I know there are other issues for us in Woodbrook arising from the collapse of Carvill Group, but the biomass plant is the big issue. Other issues although real are side issues for now... This debacle could help turn Woodbrook into a community.

I hear this is in the media. Publicity is damaging; lets discourage further contact with the press. I think there's no harm in having some scrutiny from politicians or the Consumer Council bearing on the players in this process..

Nevertheless, the letter is disturbing: Vital's opening gambit, or threat as CSM present it, seems designed to startle us. We need to ensure that nothing substantive is decided at Tuesdays EGM re Vital until all has been given due (and collective) consideration and their has been full disclosure aided by our engaging lawyers. Should we not work with CSM (at least for now) to get an interim agreement to guarantee heat through the winter? Then see what is the best that can be acheived here going forward. We can see how CSM perform. This "development" is foot into a new market in NI for Vital and is an exemplar of better housing design. But there are other biomass providers who could run our micro utilty.

CSM want us to use their lawyers Tughans Solicitors. Tughans are reputed to be really good but very very expensive (2K/day?). I understand CSM are investigating to see if the hit Vital took here might "put their lights out". But I hear that Vital are big and Scottish Power have a 40% stake? (Someone could check Vital out by looking at their accounts to see if they are vulnerable?) We may need expensive corporate lawyers but would such lawyers all not have links with PWC? Sonia of CSM says not, but I'd be wary.

Maybe the EGM should ask how it is that Chris Carvill has 24 shares (not 24 properties?) and query how 3 Carvills who are directors of Woodbrook Management Company may use those positions to make day-to-day decisions. We could vote to limit directors decision making power (I am told that needs us to vote a change in the Memoradum and Articles of Association). Clanmil have 23 shares so we need them on board. Chris Carvill and Clanmil together could have enough of the vote to push something through. (202 issued, and 1798 unallocated shares held by Carvill Grp?) I hear from several quarters that Chris Carvill is a principled guy and I found Carvills decent, shrewd. I'm just drawing on the knowledge of people around me... any real experts among us?

Now - without any defaming anyones character - it has been pointed out to me that even if the Carvill Group were "limited", "incorporated" or whatever, its directors may still have liablities, if for instance they had been wrongfully trading? - e.g. while insolvent. In such a case it is not impossible that they would seek to control the outcome of this meeting and gift lands, or whatever, to Vital to reduce their exposure from non-payment of fees or whatever. Just speculation... I'd love to just think that Chris Carvill is entirely benign but we just don't know what his position is. I'd like him to speak with us.

CSM supplied me with a pdf of the Agreement between Vital & Woodbrook Management Company. I also have (from Companies House) the Memoradum and Articles of Association for WMC and the Register of Shareholders (members of WMC) as of June 2011. They cost a £1 each to download. CSM have not filed accounts with Companies House claiming a small company exemption, but didn't we get them by post in the summer? We must check through that. I'd like us to make all relevant documents available to each other?

Hearsay is that Vital are owed a substantial sum, since Carvill Group deflauted but Sonia of CSM did not know any figure on Wednesday!
What are CSM paying Vital? It appears from googling that the entire biomass system was £2 million. We may need lawyers to ascertain if we (WMC) own the Energy Centre as was seeming planned, or do Carvills still have deed for the land putting PWC in a position of some control? We certainly were supposed to own the lands (as tenants in common). The building, plant and land value must be getting on for £500,000 . We would be nuts to give up such as assest unless in the final analysis we really have no alternative. Sonia Millar tells me PWC claim ownership/control of the Energy Centre.

Have CSM had their eye on the ball at all? There are other issues and factors some of us are aware of, but are CSM on top of this. Does CSM need our help to navigate this in addition to lawyers?

I live opposite the Energy Centre. It burns so efficiently, producing tiny amounts of ash and almost no emissions other than steam. The guys who keep it running tell me it ran fairly sweetly until Vital ceased agreed monthly engineers visits about 6 months back. There may have been glitches from the start according to another source, design flaws needing assessed / rectified. It is fairly new prototypical stuff. I'd say the controls are complex! Vital should meet with us soon.

When payments from Carvill would have stopped Vital stopped appearing each month or so as they are contracted to do. They still monitor via internet, and the local lads only have sympathetic telephone support from a high level in Vital. We should show them some appreciation.

As a result of the lack of maintenance the plant has been creaking, jamming a bit (hoppers, augers that drawing the willow chip) and setting off alarms which bring our local boiler guy in at unsocial hours. We see lights on at all hours recently and I can hear noises too. I'd say at the very least the mechanicals need an MOT.

Agreement / contract may have been breached by Vital? by WMC? by Carvill Group?

green8

My wife writes: "No need to panic about an immediate switch off as Vital have to give 12 months notice before they can walk away. I think that although the price increase is nasty it is something we may have to swallow as it is unfair to expect Vital to provide our heating at a loss. I am more concerned abouis Vital wanting to take over the Biomass as this would give them more control than I am comfortable with. Surely the issue of unpaid monies is between them and PWC."

Green8:
I don't know. If Carvill haven't paid Vital some agreed fees, then a contract could be null and void. In that case what could be construed as the recent neglect of the Energy Centre by Vital, even it were - in the wording of the agreement I have seen - "gross neglect", may not put them in breach of contract.

green8

Quoted by the Ulster Star (online):

However Vital told the Star it remains committed to the scheme and would welcome the opportunity to attend the meeting next week to explain its position but has not been invited.

A spokesperson for Vital Energi said: “Vital Energi has always been and remains committed to the Woodbrook scheme and is extremely saddened and concerned to see the scale of factual inaccuracy being portrayed to residents.
“The company has for the past several months since the regrettable demise of Carvill, requested, via the Management Company, an opportunity to explain the current status together with our proposals for the continuance of the scheme in the most economical way. We have, however, been denied that opportunity.”

Public relations? Damage limitation? We need to hear directly from Vital ourselves at this or a subsequent meeting and we need to see the detail of their calculations/report.