Share
The increasing volatility of the energy market has made energy procurement a complex issue for various organizations, including housing associations. With the rising costs of energy, there’s a growing emphasis on securing affordable rates to minimize the impact on tenant service charges. In response to these challenges, it’s crucial to rethink the strategy behind energy contract lengths. Here, we explore how housing associations can benefit from long-term energy contracts and how to navigate legal prerequisites like Section 20 of the Landlord and Tenant Act 1985.
Introduced in 1985, Section 20 of the Landlord and Tenant Act mandates landlords to consult tenants before initiating major works or entering into long-term contracts for goods and services, including energy. For contracts extending beyond 12 months or costing an individual tenant more than £100 per year, a minimum three-month consultation process is required.
Previously, many housing associations opted for 12-month energy contracts to sidestep these Section 20 requirements. However, given the current market dynamics, this approach may lead to higher service charges for residents than necessary. Inteb, a leader in the field, suggests that seeking a dispensation from Section 20 can offer opportunities for better pricing and more predictable budgeting.
When you secure a contract for more than a year, you gain access to procurement opportunities not available with shorter contracts. This flexibility allows your organization to explore and choose from a wider array of options.
Commodity components of gas and power contracts can be traded on the wholesale market up to six years in advance. Long-term contracts enable more accurate budget and cost projections, reducing the risk of unexpected service charge spikes for residents.
Long-term contracts also lessen administrative workload, as the renewal process becomes less frequent, saving time and resources.
Given that the energy market’s pricing changes daily, a three-month consultation process isn’t always practical. However, housing associations can seek Section 20 Dispensation to shorten this period. This involves filing an application to the first-tier tribunal. The circumstances must be such that the urgency of the situation (like fluctuating market prices) doesn’t allow for a prolonged review process.
Inteb recommends always seeking legal advice in this process. They can also assist with providing the necessary energy-related documentation for your application.
Some forward-thinking housing associations have already saved millions for their residents by opting for long-term energy contracts and utilising Section 20 dispensations. On the other hand, those sticking to old methods may inadvertently burden their residents with unnecessary costs. With the current instability in the energy market, now may be the perfect time to consider long-term energy contracts. They offer not just financial benefits but also the flexibility and foresight needed to navigate a challenging market. By taking the extra time and effort at the onset, housing associations can secure optimal prices that will benefit both the organisation and its tenants in the long run.
In this volatile energy landscape, long-term contracts serve as a beacon of stability, allowing for more predictable budgeting and reduced administrative burdens.
If you’re still navigating the complexities of energy procurement, you don’t have to go it alone. At Inteb, we offer expert consultancy services that can help you make sense of market trends, legal requirements, and the most advantageous contract lengths. Reach out to us for personalised, expert guidance, and let’s pave the way for a prosperous, sustainable future together. Don’t miss out on an opportunity to save millions while making a lasting impact on both your organisation and the wider community.
Disclaimer: This blog is for informational purposes. Always consult with legal advisors and energy experts like Inteb for personalised advice.
View
View
View
View
View
View
