Although politicians may be reluctant to use the ‘C’ word, everybody else recognises that Britain is in the throes of an energy crisis. We haven’t seen anything quite like it for almost 50 years and it is causing serious concern for householders and businesses alike supporting the need and importance for taking energy meter readings.
What has fuelled this rise in energy costs?
The sudden increase has mostly been down to a rise in global demand for gas as the world’s economies recover from the pandemic alongside the depletion of reserves caused by last year’s exceptionally severe winter. All are contributing factors that have sent energy costs soaring.
Since the start of 2021, the wholesale price of gas has risen by a staggering 250%; in fact, it rose by 70% in August alone.
Since the UK has an unusually high dependence on gas to produce its electricity – somewhere in the region of 85% – both forms of energy are affected.
What is the impact on energy companies?
In January 2021, there were over 70 businesses supplying gas and electricity to consumers. Fourteen energy companies collapsed between 1 September and the end of October, with others expected to follow until we may be left with just the known six energy companies: British Gas, EDF Energy, E.ON, npower (they are in the throws of closing down and becoming part of E.ON), Scottish Power and SSE.
Those companies that have collapsed are:
- GOTO Energy Limited (18 October)
- Daligas Limited (14 October)
- Pure Planet (13 October)
- Colorado Energy (13 October)
- Igloo Energy (29 September)
- Symbio Energy (29 September)
- Enstroga (29 September)
- Avro Energy (22 September)
- Green Supplier Limited (22 September)
- Utility Point (14 September)
- People’s Energy (14 September)
- PFP Energy (7 September)
- MoneyPlus Energy (7 September)
- HUB Energy (9 August)
Information courtesy of National World
Fuel bills are rising
Customers of the five largest failed suppliers face a weekly increase of £6.70 when they move to the default tariffs of the firms that are taking over their accounts.
The energy price cap, imposed by the government to protect consumers on the most expensive standard variable rate, has increased by £139 for consumers on these default tariffs and £153 for those using pre-payment meters.
The shockwaves have hit about two million people so far, with the upheaval far from over.
The normal response to energy price rises is to shop around for a better deal and switch providers, which is the rationale behind today’s privatised utilities industry; however, these are not normal times and it is virtually impossible to escape the consequences of this global phenomenon.
The advice from industry experts such as Martin Lewis is not to switch but to hold tight and see where the dust lands. This is because there are no better deals – the price cap is the only one available and applies universally.
For tenants, this has come at a particularly bad time.
The ban on evictions put in place during lockdown has been lifted; therefore, people in private rented accommodation have no option but to meet their full rental payment obligations, even when they might not have returned to their pre-pandemic earnings level.
Their income will now be further squeezed and there is almost nothing they can do about it. Some energy customers are in the unenviable position of being passed by default from one failing company to another and have to accept the new tariff imposed.
The company they end up with is known as the ‘supplier of last resort’ and a new contract is deemed to be in place without anything being signed.
Energy meter readings
The one thing that every tenant can do is to make sure they regularly take accurate meter readings.
When they are moved to their supplier of last resort, all energy supplies will continue as normal. The government and Ofgem insist there is no shortage of supply, so we must assume there will be no interruption; however, the new supplier will be responsible for billing all accounts inherited from the collapsed company from the day of the collapse making the need for energy meter readings even more vital.
They are obliged to honour any credit on the account, while the failed company will still bill customers for any outstanding sums.
Collecting and sharing meter readings
For these reasons, it is highly advisable for tenants to keep their own record of energy usage and meter readings, not just occasionally but as often as possible.
They should clearly note the dates of the meter readings. If any dispute should arise over which company is responsible for credits and debits, this may have a financial impact because the amounts in question will be likely to fall under different tariffs depending on the precise dates.
Even where a smart meter has been fitted, it would be wise not to rely on this but to collect real-time data to establish the true liability.
Here at Inventory Base, we have long held the view that meter readings should be a routine feature of property inspection reports.
They will naturally be a standard requirement at the beginning and end of any tenancy but are just as important in any annual, six-monthly or even quarterly interim inspection. In normal circumstances, they could form the basis, at the very least, of a decision to look for a better deal.
With the energy industry in its current crisis, should interim meter readings become an essential report feature?
Inventory Base specialises in the development of inventory property management software for use by inventory clerks, landlords and letting agents. The same tools can be very useful for tenants. Inventory reports are not about assigning blame or evading liability; instead, they are intended to ensure certainty and fair dealing.
We have made our software easily adaptable so that meter readings can become one of the compulsory checks in any inspection. Traditionally interim inspections have not noted meter readings as they are usually seen as a tool to identify any immediate maintenance issues, over occupancy or poor property management by the tenant.
However; with the likelihood of energy suppliers beaconing insolvent, go bust or be subsumed by the large corporate providers, an interim reading may prove beneficial to both the tenant, landlord and managing agent.
It is extremely unnerving when your energy supplier goes bust.
There is some comfort to be gained in the knowledge that there is nothing to cause panic in this situation, as supplies will continue.
However, being armed with the fullest and most up-to-the-minute data about how much energy has been used, when and on which company’s tariff is the only way to protect oneself from the possible consequences of an industry in chaos.
If energy prices are heading into an uncertain period, it makes sense to create as much certainty for oneself as possible. Capturing regular meter readings with Inventory Base software is one option to help provide that certainty.