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Minimising energy cost impact on service charges

21st July 2020

Among the most common feedback we at Inenco receive from social housing providers, is that maximising the likelihood of the cost of energy remaining stable over an extended period of time is a key priority.

The primary driver for cost stability is the need to make certain residents’ service charges are predictable and do not incur sudden spikes due to unforeseen increases in costs, with energy one of the most frequently cited reasons for unexpected rises.

In a recent survey conducted by Inenco in partnership with Inside Housing, more than half of respondents indicated that the amount their organisation spends on energy consumption has a knock-on effect on service charges for residents. 17% believed that it impacted service charges to a large extent, while a further 34% felt that it had some impact.

For residents that can be on low incomes, keeping service charges both low and predictable is crucial. For housing providers, sudden increases are also one of the most commonly cited reasons for residents leaving poor Survey of Tenants and Residents (STAR) ratings for their housing association which is a key measure of success for many organisations.

Here, we run through five ways your organisation can look at tackling rising energy costs, securing savings that translate through to lower, more consistent service charges.

Shop Around

Ensuring that you are on the energy tariff that best fits your organisation’s budget, financial goals and level of risk should be one of the first steps you take to stabilise and reduce costs.

Almost half of respondents were concerned that they were not performing as well as they should, with 25% having a strategy in place but believing it could be better implemented.

While 23% had no such strategy, leaving them particularly vulnerable to price fluctuations and potentially paying far more for their energy.

Forecast Costs

A wide-ranging energy procurement strategy will also enable greater oversight of future changes in energy prices, allowing possible spikes to be mitigated and preventing them impacting negatively on service charges.

Only 6.5% of respondents believed that they had a good level of understanding of their consumption and how costs were likely to change over time. In contrast, 32% felt that they had little or no understanding of how their prices would change over time.

Understand Consumption

One of the most startling insights to come out of the survey was that just 2.5% of organisations currently have smart meters across their estates.

Without Automatic Meter Readings (AMR), understanding how you are using energy and finding areas where it is being wasted becomes extremely challenging.

Manual meters also leave housing officers struggling to keep up to date with billing. If you are still using large numbers of manual meters, speak to us about upgrading.

On-Site Generation

Questions regarding on-site generation options are among the most commonly fielded by our specialist affordable housing team.

Many housing providers recognise the value that options, such as solar PV or heat pumps, represent both in terms of net savings and reduced carbon emissions.

However, not all are taking the plunge. Over 46% of respondents indicated that, while they recognised and had discussed the benefits of on-site generation, they had no concrete plans to implement any.

Energy Efficiency

The most reliable way to reduce energy costs, and subsequently service charges, is to use less. A vast array of energy efficiency measures are now available and large numbers of respondents had started making steps in this area.

Overall, changing fixtures to more energy efficient options, such as LED lighting or timed controls, was the most popular option, with over 60% having already implemented it in some form. Others included engaging with staff (55%) and a better understanding of consumption (44%).

Each of these can be implemented at relatively low cost or with quick payback periods. Many other housing providers are already implementing them, so if your organisation is not, now is the time to act.

For more information on how to get to grips with your energy costs, contact our specialist housing team on 08451 46 36 26 or visit our social housing page.