Retrospective price rise (heat network)

Heatnetworkvictim

Hoping to get some advice. Our estate has heating and hot water supplied via a heat network. They sent out notification in March of a price rise within 30 days. 
We then heard nothing else. 
In September, we recieved notification of the new tariff, with rises in keeping with the terms set out in the contract. And whilst a jump I am happy to accept this. 

However all communications from them state the new prices come in from 1st April (this year) 

Can anyone advise me if 
1) they can legally back date the price rise as we had already been on the "new" tariff for 5 months before they actually informed us of what the charges were.
Arguably they gave us notice of a price rise, but failed to communicate what this actually was. They have also issued bills after notifying us, with the old tariff charges on. 

2) if they can't backdate it what the appropriate process to appeal this is as heat networks (as far as I can see) fall outside the control of most regulatory bodies

Thanks for reading and any thoughts. 

Heatnetworkvictim

And apologies in advance if this is the incorrect forum, new here and not 100% sure where hear networks would fit in

QrizB

1. Check your contract. If it lets them impose retrospective price increases, then yes they can probably do it.

2. Yes, regulation of heat networks is relatively light.

Ectophile

But while regulation of heat networks may be light, unless the contract specifies how and when price rises will apply, then a retrospective price rise is almost certainly an unfair contract.

"A term which has the object or effect of giving the trader the discretion to decide the price payable under the contract after the consumer has become bound by it, where no price or method of determining the price is agreed when the consumer becomes bound." https://www.legislation.gov.uk/ukpga/2015/15/schedule/2/enacted

cbmatheson

Hi,

We also experienced this. I posted about it here:
https://forums.moneysavingexpert.com/discussion/6451676/retrospective-changing-of-tariff-on-heat-network

There has also been a recent Guardian article on this at https://www.theguardian.com/money/2024/jan/08/tenants-with-shared-heat-systems-shocked-to-be-back-billed-for-hundreds

I would be very interested to share more information on this if anyone wishes to private message me.

cbmatheson

Further to the above, a response I received from our local trading standards, to whom I was referred by our MP, on this is below:
—

Dear Calum,

 

Thank you for your email.

 

The main effect of the legislation which applies to unfair contract terms, part II of the Consumer Rights Act 2015, is that it makes terms which are deemed unfair non-binding on the consumer.  This means you have the option to challenge these in court if you wish.  However, this is a civil matter between the parties to the contract.

 

Greenwich Trading Standards primarily uses its resources to focus on breaches of criminal law and rarely gets involved in civil matters because of the scope of the legislation we enforce.  I recognise that you are facing a challenge but I am afraid it is our decision that we will not be taking any action in relation to this civil matter. This in no way precludes your or any other party from taking their own action.

 

It may be worth considering obtaining legal advice from a Solicitor (which you may be able to do via any insurance cover you have in place) or Citizens Advice Bureau.

 

Regards,

—

I found it somewhat disappointing that they were unwilling to take this up. Perhaps others might have better luck.

MultiFuelBurner

As per the other thread it really does depend on what is in your contract as to what the heat network can do.

In most cases they would be stupid not to protect themselves the contract will all be in the heat networks favour but that doesn't mean there isn't a loophole should someone want to throw their money at it.

Would.it be worth it? Who knows but you would have to get everyone on board and digging into their own pockets.

cbmatheson

In my case there’s certainly nothing in the contract that allows retrospective tariff changes, regardless of whether or not such a term would be fair. My contract says 31 days notice is required for a tariff change. My Heat Supplier have however declared that the contract is now ‘invalid’ (how they can do such a thing I’ve no idea).

The Guardian article is also quite clear that the Heat Trust believe this is unlawful:
“My understanding is that is unlawful under the Consumer Rights Act 2015, and we’ve been advising people not to accept it. If you look at what the act says about unfair contracts, terms which allow the supplier to retrospectively fix the price really are a no-no. Some customers have told us that when they’ve quoted the act, their supplier backed down.”
https://www.theguardian.com/money/2024/jan/08/tenants-with-shared-heat-systems-shocked-to-be-back-billed-for-hundreds

Unfortunately with seemingly no regulatory protection, companies appear to be able to bully residents into paying these charges as they have deeper pockets to counter any legal challenges (in fact if you are a leaseholder they will likely even be able to charge their own legal costs onto Service Charge bills should anyone challenge these…)

MultiFuelBurner

https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/heat-networks

Might be worth outlining the issues to them on the feedback

Scot_39

It may be irrelevent to some, but my friend who runs a small shop on a business tariff has had charges applied retrospectively under pass through clauses in energy contracts.

His 10+ page contract had nearly 4 pages of tables detailing what was allowed.

My sister was in local housing association with mid rise flats - supplied by now external commercial firm upgrading communal heat network - 3 old central boilers gas, 3 had been updated to biomass, for 6 blocks when left  - for hw and heating - also had wholesale linked pricing.  No EPG discounts last winter.

And so both ended up paying pretty much wholesale gas linked energy rates as a result, very much retrospectively in HA case - as bill rates reviewed every 6m to match actual operating costs and a fixed profit allowance. Others at some English councils are only updated annually.  So some now still  paying rates linked to last year's highs despite recent wholesale / cap drops.

And neither's charges bore any resemblance to domestic cap - especially the EPG (*) capped version of it last winter.

It pretty much made any initial price offered on first page of the commercial deal meaningless.

So more fixed term than fixed price.

All legal according to advice he was given via a local small business group - all clearly in contract he signed up to.

But in years past commercial rates have been cheaper than domestic  - and in some cases people with mixed use - would put homes on commercial contracts.

And there have been lots of other people on domestic / block heat networks who were exposed to pretty much full wholesale rates on gas and electric - which made media headlines during the post Ukraine sanctions / energy crisis.

Arguably only reason govt kicked in, so new move by Ofgem to regulate marketplace

I suspect many were perfectly legitimate based on terms of contract  - even if others maybe suppliers or landlords desperately trying to keep afloat regardless of old contracts.

Which they might argue were no longer fair to them given price spikes.

In many leases - landlords or their appointed agents (often third party factoring companies in Scotland if tennants - oops leaseholders - not self factoring)  are still given loads of legal power to determine supply contracts and pricing. 

This will be unpopular in  this thread,  but playing devils advocate, looking from a suppliers point of view - expecting to continue to pay 25p for something that now costs or in past did cost your vendor £1 plus to provide (**) - is pretty unrealistic and clearly unsustainable commercially.

But I do take on the points re notice of rates not being served in a timely fashion and the clause in at least one posters contract saying old energy provider was responsible until notified - but that was on contract before agents renegotiated the deal - without notifying leaseholders etc)

The EPG cap has cost future net taxpayers £10s billions to subsidise our bills down to nominal £2500 at TDCV - so c33p electric  c10p gas  kWh rates last winter.

The real Ofgem cap in Oct 22 was nearly 3x the cap in Aug 21, the £4279 peak in Jan 23 (the EPG discounted that by over 40% to £2500 - all via capped unit rates ) was nearly 4x (**) the cap in Feb 21.  Spot daily wholesale prices went far higher than that 4x would suggest at times.

To build that sort of price variation into rates ahead of time would have been seen - and rightly so - led to accusations of profiteering.

Not sure realistically how many small schemes could hedge against it - especially at that level of change.

The only other option commercially - is to then bill relative to real market rates.

During EPG companies did just that - except at peak they were essentially billing us c60p directly  and the govt - so many of us -  c40p in every £1 of costs.

Peoples expectations, arguably encouraged by the not at all traditional lower price fixed term fixed price market deals on domestic energy in recent years.

Many of which stemmed by the actions of the now failed - so badly regulated by Ofgem -  challenger suppliers - and their switch to save policy mantra. 

There is now at least one large domestic suppliers fixed term contract - iirc SP - with non wholesale rate - if you like Ofgem (= govt) policy pricing - pass through clauses - arguably a consequence of Ofgem's own "doubling" of standing charges more than  wiping out supllier profit margins  on historic fixes.
 

Don't expect miracles from any Ofgem regulation when it kicks in.

It's changes will also take suppliers costs - including provision of in some block heating cases expensive capital costs - local kit like block based boilers and HIU etc  - and views into account.

Just as its current SVT cap does.

It's past actions - including the domestic energy cap itself - may well have arguably contributed to the failures of so many domestic suppliers - and then via SOLR levies everyone's bills.

They may not be keen to repeat such interventions to trigger other failures.

In order to pay a supplier - you have to have a supplier.

cbmatheson

In our case, the management agent R&R apparently took over gas purchasing early 2022, took on increased wholesale costs, but didn’t tell leaseholders at the time. The previous Heat Supplier (With Energy) continued on as a billing agent so we didn’t notice any difference. We continued to received bills quoting a 19.995 end user unit cost from April 2022 through to April 2023, with meter readings, which I consistently paid on time. In May 2023 we were informed that a deficit had built up due to the higher wholesale costs. Apparently R&R had reviewed the wholesale contract multiple times over the period but hadn’t bothered notifying leaseholders (or private tenants for that matter). We were given 31 days notice for a tariff increase to apply from June, but told the deficit charge would be based on energy consumed during the 15 months from April 2022 to June 2023. (Why they bothered giving ‘notice’ for the tariff increase whilst also retrospectively charging I’m unsure!). When a large number of us challenged these charges we were then told if the wholesale gas debt wasn’t cleared, our site would not qualify for preferential rates and we’d therefore pay high future costs if funds were not recovered (essentially blackmail). Our RMC is named as the heat supplier, not R&R.

The landlord, and controller of the RMC, desperately struggling to stay afloat in this instance is London and Regional, who boast about a 9Bn property portfolio on the front page of their website.

I don’t expect miracles from OfGem regulation but if it stops behaviour like the above then it can’t come soon enough.