Reselling electricity versus reselling heat

Reselling electricity gas and water have very different regulations to reselling of thermal heat

The rules are relatively simple with reselling gas and electricity. The Utilities Act 2000 determines that intermediaries (i.e. those who provide energy but are not a licensed energy supplier), can only pass on the cost of the energy, ( or less ). Its known as the maximum retail price ( MRP) . Ginger has recently consulted on a site who’s residents are being charged additional fees. This is a big no no! The intermediary might not know this is prohibited but the billing agent should absolutely be aware of the rules and should have advised their client accordingly. Passing anything on other than the unit rate VAT is wholly incorrect. No administration charges or even the CCL must not go onto domestic residents billing .

For an intermediary who is thinking these seems unfair, because there is a cost of sale in producing resident invoice and so they should be able to recover these and all other charges in their energy bills through resident energy billing, we would simply advise that the MRP rules are clear. These additional costs will need to be picked up by service charge or absorbed elsewhere. What cannot happen is them be added into the energy billing sent to end users. Residents have the right to see the intermediaries’ bills or other proof from the supplier, ( such as a copy of the contract ) to ensure the unit rate is being passed straight through at MRP or less. Failure to do this will result in a complaint being raised with the energy ombudsman who will ensure the MRP or less is applied and residents are refunded any difference from the overcharges.

Conversely, when selling thermal heat, the heat supplier is able to add to the commodity ( typically gas ) costs. When reselling heat, the Heat Network and Billing regulations 2014 ( amended 2015 & 2020 ) are applicable. Heat suppliers can add all costs into the tariff they charge to residents, this includes the cost of billing agent fees ( limited to £92 per apartment per year ), debt provisions, insurance, maintenance. In most cases the heat cost will be far more expensive than the cost of gas used to create the heat, due to the buildings efficiency level which also need to be taken into account. In our experience typically it takes 3kWhs of gas to create 1kWh of heat.

For more information on this you can find the guidance on our attachments and here

If you are a resident and are in doubt, ask your billing agent to explain how the tariffs are calculated. Good agents will have the details to hand and will be happy to share them when asked. Afterall, they want to gain your trust. You may not like what you see – energy costs are very high right now, but having a transparent view of this information is key.

Resale of Gas and Elec Guidence A guide to water resale 2020