pitfalls utility accounts suppliers part 2 property management guideUtility suppliers can unfortunately be a real problem when it comes to managing properties. For what should be a straight forward issue to resolve, for example how much has been used and therefore how much is owed, things can suddenly spiral off into endless tangents and fruitless correspondence.

More often than not, it’s not the staff at the utility provider at fault for this, but the system and bigger company-specific red tape. The main utilities are gas and electricity, but there are of course others such as water supply and drainage, phone and internet, and TV aerials and cables. Ask any good Property Manager about sorting the utilities out at a property and their shoulders will shrug in frustration.

So to try and unpick things and help you glide through any problems, here are twelve of the top principles to understand about the utility world. If you can get these, which have been presented as two opposite aspects for each principle, then you’re well ahead of understanding how the utility-world really ticks along and being able to progress with getting things agreed smoothly.

1. Suppliers Versus Account-Holders

You may have an account with Scottish Power but your property in the South East is physically supplied by another supplier. As certain markets have been re-regulated over the years, utility providers all over the country can now be the entity dealing with your charges even if they are not involved in the physical cables/wires etc. to your property. You’ll therefore often hear of generic reference numbers such as Meter Numbers, MPAN numbers, and Supply Numbers which are the way of referring to these actual physical points of supply.

2. Account Names Versus Contact Names

Each utility account must be in the name of an entity that is ultimately liable for the account and costs. These must be a real entity, whether a personal name or legal structure like a company or charity, which the provider may need to validate and credit-check. Account holders can however have a different point-of-contact acting on their behalf to deal with enquiries, receive invoices, and issue payments.

Ideally the provider will ask for a Letter of Authority from the account holder that states that they have appointed someone to act on their behalf - for example a managing agent, who has the authority to make decisions. But watch out for these details being confused on the paperwork and risking accounts being mistakenly issued in the contact-name rather than account-holder name, or a historic point of contact still being used.

3. Actual Meter-Reads Versus Time Information

When you look at modern meters, particularly electricity meters which have lots of different rates, there is often a button to press to scroll through the various pieces of information on the same screen. Make sure you write down (or photograph) the right pieces, i.e. the actual rates/reads, as there will be things like the date and time there, and technical data like Maximum-Demand-reads.

4. Invoices Versus Statements

The ‘invoice’ you receive from utility providers are often not literal invoices to pay, but made up of what you actually owe now as a balance and statement of account. So you may owe £30 for this last period invoice, but they have added on the previous £20 you owed. Although it is handy to know the reality of what cash is due, it’s difficult to work out what actually needs paying, which may be just the £30 on this document if you have already sent the previous £20.

5. Actual Versus Estimated Reads

A classic issue, where the providers need to estimate a read on your bill if they cannot gain an actual meter reading to charge to. Firstly check out the practicalities of them getting this read, and whether it depends on sending a reader out and having access details, or you agreeing to call or email or amend online yourself at a certain time every period.

Secondly, estimates can be okay to get by with, but make sure they are fair and not way too high (or even low), a typical example being a vacant area not using gas or electricity but providers have assumed a high rate from a previous occupier’s usage.

6. Paying on Invoice Versus Paying on Direct Debit

Regular payments from your bank through Direct Debit can be easier, convenient for everyone, and in many cases, get you a slightly better rate. You have no control over these payments though, which, remember, can be different each month therefore if there was a sudden increase for whatever reason, which will be automatically coming out of your account.

Also, some people and organisations simply can’t arrange this, or are regulated so they cannot set up these to automatically come from client accounts without a sign-off procedure, in which case you’ll have to simply pay upon receiving the invoice (word of caution here, utility providers are hot on getting payment, therefore they will be soon on the phone literally just days after invoices sometimes to receive payment).

7. Contract Versus Non-Contract Rates

You could set up a regular contract for 12 or 24 months, particularly for business premises and larger amounts, which means better rates although being tied into it for that period of time. Check that the contract can be transferred to any new occupier/owner within that time, and shop around for the best deals. Watch out for contracts suddenly coming to an end, missing notice periods to change, suddenly getting high out-of-contract rates, and see if a new contract rate can be back-dated (often through the current supplier)

8. Online Versus Offline Accounts

Providers are moving more and more to online accounts as ways to view bills, process changes, and enter reads. Great idea, which often works out well, but be careful of it being more of a hassle than what it’s worth over a good old fashioned phone call and paper-bills, particularly if you’re dealing with multiple accounts and meters. Speaking with someone can help make sense in layman terms what is happening with your bill and account (although remember to make sure you make a written note of any calls and outcomes, ideally through an email or letter back to the provider).

9. Standing Versus Use Charges

Accounts like water, gas, and electricity typically have two broad types of charges. Firstly, standing charges which are there to pay no matter how much you use, and include aspects like VAT and any extras (check if you can agree a VAT reduction to say 5% as with charities).

Secondly, they charge for how much you use, often expressed as a cost per unit of use, with the rate to be agreed and then the actual amount of units determined by meter readings (see actual and estimated reads above)

10. Supply Versus Correspondence Address

The supply address is the actual property where the utility service is provided, whereas the correspondence address is where the communication and bills go. Often these are the same if the account-holder occupies the property, but if there is a separate, say, landlord or managing agent then this correspondence address needs to be at their location.

Make sure these are understood and correctly noted on the utility provider’s systems, and watch out for important letters such as Disconnection Notices going to the supply address without the correspondence address knowing about this.

11. Direct Liability Versus Recharges

You may have one party responsible for the main bill, but in reality it benefits several different occupiers who in turn have an obligation to pay towards this cost. Often the main bill and accounts needs dealing with by the main party, and they undergo a completely separate exercise of recharging these out to separate parts directly or through a service charge.

This can be complicated, involving sub meters for actual reads of usage to determine the apportionment rather than a typical area-basis in a service charge, and the need to carefully split standing charges and add administration charges.

12. Utility Consultants Versus Yourself

Third-party utility consultants can help resolve utility queries on your behalf. This can be a great help if you have not got the time or experience, although make sure you work with a good one. Also be clear on what you want them to do, as they often help secure the best rate and supplier, but you might need help with other issues like recharges and historic problems.

When instructed, as well as being aware of the consultants’ Terms and Conditions, you may need to issue a Letter of Authority authorising them to speak with utility providers on your behalf. In terms of their charges, they often get paid through the deal with the final utility provider, although additional bolt-on services may require additional charges to be paid.

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