New build, expensive energy tariff, can't switch provider

kYuZz

Hi, next month I'll move to the flat I've just purchased. It's a flat in a new build residential development and I've just learned that heat and hot water are provided by E.ON, and there's NO possibility to switch to another provider.

The cost seems pretty high:
- 5.28p/kWh + VAT
-  £357.99+ VAT / annum in "energy service charge"

I'm looking for confirmations that this is actually a high price. Also, is it common for the occupiers of residential buildings to not have the option of switching energy provider?

EDIT / CLARIFICATIONS
- This costs were never mentioned to me during the sale process, neither by the developer or my solicitor.
- My solicitor sent me an email with the heat supply contract months after the exchange of contracts, only a few weeks before completion.
- There's no gas in any of the flats of the building.
- I guess there's a central boiler room that pumps heat in the form of hot water in every flat.
- I estimated my hot water/heat annual consumption as 2280 kWh, based on the consumption of a friend with a similar flat in the same area.
- You can find out more in this Facebook post and its comments.

Gerry1

5.544p/kWh and a daily charge of £1.03 inc VAT is scandalous, assuming it's gas.  I'm paying 2.0265p per kWh, Daily Charge 28.497p.

Is it a district heating scheme?  Did you and your solicitor not check before signing the contract?

Edit - VAT added to daily charge

macman

No, it's not, but you have purchased a flat with a district heating scheme, with a central boiler system supplying both heat and hot water to each unit. So there is no possibility to switch supplier unless the management company nominate a new one for everyone. There is no regulation of these schemes, so they can charge whatever they like.
Surely you were aware of the energy supply arrangements when you agreed to purchase?
The service charge is about £1 a day, so about 3 times what you might pay for separate gas and electricity supplies. However, this will probably cover maintenance and repair of the supply pipework and heat exchanger in your flat, so not too unreasonable. 5.28p per kWh is expensive for gas, but cheap for electricity. Many new-build apartments would simply use cheap-to fit/expensive to run electric-only convectors. What you don't know at this point is the likely annual usage. 
The main problem with this set-up is that you have no control over possible price increases in the future, and you can't switch to a cheaper provider.

Robin9

Sounds like a District Heating Scheme.    Best of luck.  On the credit side you don't have to budget for replacement boilers or annual servicing. 

Who supplies the electric - that is usually the direct responsibility of the occupier. ?   The usual comments apply - read meters, take photo's, contact existing supplier and become their customer under a deemed contract -  then switch, assume about 2,900 kWh per year. 

Gerry1

If other properties in the area have their own gas supply then you'll find it hard to sell the property except at a significant discount.

However, if there's no gas in the area then it's probably about the same as as ASHP but without the capital and maintenance costs so not quite so bad, but you still have no control over the costs unless you freeze.

macman

This won't be gas or electric: The heat extracted via the heat exchanger for heating and hot water is metered at the individual flats. No gas supply required. The electricity supply to the property will be separately metered and the OP can choose their supplier as usual. But this will of course be a minor part of the total energy usage, maybe 20-30%.

dogshome

kYuZz said:

EDIT / CLARIFICATION- My solicitor sent me an email with the heat supply contract months after the exchange of contracts, only a few weeks before completion.

Not he first time we have seen very late notification of a District Heating scheme to new Buyers/Renters, in fact so often it seems to be a deliberate ploy of  Building Owners and their Estate Agents - Ask your solicitor questions, unless that is you got suckered by the "Use our solicitors, it's cheaper & quicker" routine

macman

But, when viewing a new build, is that not the time to ask how the property is heated and hot watered? Never ceases to amaze me how often people rent or buy with not a clue of how the utility systems work, or even which systems are installed.
New build developments will surely be publicising a district heating system as part of their marketing greenwash? The pricing might not be apparent at the build stage, but the specification should be.

Gerry1

kYuZz said:

- I estimated my hot water/heat annual consumption as 2280 kWh, based on the consumption of a friend with a similar flat in the same area

That seems remarkably low; the average is about 12,000kWh, although a flat is likely to be lower, especially if new and well insulated.  Are you sure that it's not your friend's non-heating electricity bill?

kYuZz

Gerry1 said:

kYuZz said:

- I estimated my hot water/heat annual consumption as 2280 kWh, based on the consumption of a friend with a similar flat in the same area

That seems remarkably low; the average is about 12,000kWh, although a flat is likely to be lower, especially if new and well insulated.  Are you sure that it's not your friend's non-heating electricity bill?

Yes, that is low. That includes heat and hot water. The flat is a new build with a high-B energy rating and is on the top floor, which means he passively enjoys for free the heat that comes up from the flats below. He said he's hardly ever switched the heating on.

annetheman

Just wondered how you're getting on, OP? How have you found your district heating?

There will have been a mention of the heating and hot water supply arrangement in the reservation form you signed. This is mandatory so you will find it as one of the TERMS OF SALE. You will have signed this when you paid your initial £500 or whatever reservation fee many months before the solicitor sent the agreement.

Mine was in there and I then looked around to find out more about this type of heating, and found very little info on it.
Here is my anecdote if it helps:

It has only been a week for me but so far this district heating scheme seems to be okay, which I too was very skeptical of.

In theory it is a great idea IMO; I love the 'green' potential, possible benefits to the environment and the lack of maintenance of a boiler/gas supply, but the lack of any regulation of the suppliers whatsoever and the monopoly to which you are subject once you complete made it very unappealing. But when you think about it, it has to work that way by design.

I hope an independent regulator is appointed though, not just one where the directors of all the district heating supplier sit on (there is currently something similar for district heating suppliers but it isn't a regulator, sort of like a "charter" with voluntary membership). The scheme works well in mainland Europe and has done for years, but as a relatively new player, the UK is likely to get it very wrong a few times at least before getting it right, so consumers must be protected from limitless costs.

I have only been in the flat 1 week as I mentioned but it is so well insulated as a new build and so warm, I have not turned heating on once despite several freezing nights. Constantly at between 21-26 (!!) degrees, depending on the sunshine, as it is like a greenhouse. So my usage has been solely hot water and in 1 week I have spent £3.40 (1 person living alone).

Including my standing charge of around £18.60 per month standing charge (which covers "admin charge for running and maintaining the system -- suspiciously high IMO, breakdown needed!) and probably less than £15 usage, to make £33.60. This is less than my gas bill at previous flat which had GCH; I turned on heaters 3 times per day and was still cold some times - also doesn't include maintenance of the boiler etc.

But if I turned on the heating (I HIGHLY doubt I ever will) this would definitely be high IMO.

All in all, I think my bills will be comparable or cheaper with this district heating scheme, but I am actually just worried about how unbearably hot it might get in summer. We shall see!

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