As everyone knows, utility bills like gas and electricity can be sky-high and seem to be on a continuous upwards trend. For those involved with managing property, you’ll know what an issue this can be to the cash-flow and affordability of a property interest.
If you’re paying the bills direct, like a tenant for their occupied area, then you’ll feel the pinch. But even when you’re paying for indirectly like through a service charge for communal charges, you’ll still get hit with a cost somewhere.
In actual fact, even a landlord who passes all these onto a tenant can’t necessarily sit back and do nothing, as this may affect an occupier’s ability to pay rent and even stay solvent.
The Contractual Goods News
There is a sign of hope though, in that serious utility-users can look at agreeing beneficial contracts with the energy suppliers, and keeping a tab on costs. The more you’re using, the better your position can be to agree the best possible rates.
So, whether you’re, say, a commercicommercial occupier, or a residential block-owner mopping up communal-area costs, you need to investigate these direct-deals with the utility suppliers like nPower, SSE, British Gas, and all the other ones in the market.
And as you do, here are six key factors to bear in mind.
1. The Right Brokers
You’re probably familiar with the utility brokers who offer to procure just the right deal with the supplier. Well the good news is that this may well be the case, and probably a better option than an online website for just your home use as they will have the right contacts and deals to agree.
However, for straight forward ones where it’s simply a case of getting the best rate from the top suppliers, then you could just do a DIY job and approach the appropriate supplier yourself.
In those more complex situations of recharges and multiple accounts and meters where you’ll probably need help, then be clear on what their commission is (fortunately paid direct from the supplier’s rates).
2. The Length of Contract
Getting into a longer-term contract with a supplier will mean generally better prices. Usually the longer the better, although not necessarily the case and therefore you need to take the right judgement on how the energy market will fluctxuate over the next few years.
Minimum ones are usually a year, maximum more like three years. Not only get all the possible variations to look into, but understand how fixed these are during the periods for different liable-people, and even at the end of the contract what periods and notices you need to be aware of.
3. The Market Rates
Of course, this is essential, to get the best price possible. However, you need to dig a little deeper to see how these are made up.
The two main components are standing charges and unit rates, the former being a set-charge per day irrespective of how much juice you use, and the later one being based upon the actual units-of-consumption.
As an end-user you’ll be more bothered about the end cost, and therefore make sure any prices are applying the right estimate of proposed use, not only just using historic data which will differ if you think this will go up and down over the next period. This is simply down to a use issue, not a rate and deal one.
If you don’t have this kind of information, then okay, you can just look at generic rates increasing or decreasing but just watch out for standing charges and use suddenly changing the reality of what you end up paying.
And whatever basis you use, make sure you get a fair picture of what the comparable rates are in the market, which is surprisingly difficult to get from a broker who gets involved in all the techie-talk.
So keep simple – how much is the market increasing, say, and if they reckon British Gas is the best deal then at least say advise on how the others compare to this.
4. The Final Documentation
You’ll end up signing a contract to set things up which is a separate document to the actual invoices being paid. If you’re dealing with a new property, then check if these are already in place and locate copies; you may find that there’s a hidden deposit taken by the previous owner that needs accounting for somewhere.
Getting these contracts can be different, with utility providers often first wanting an authority letter from the true account-holder thant any representative like a managing agent having clear authority to act on their behalf.
But when the final contract comes through make sure this is in the ultimate liable-person’s name even though it may be signed by their representative.
5. The Final Recharges
As an aside really to the issue of the main contract, just check the actual end-bills and how they are recharged.
This can be particularly important when you change suppliers under a new contract;, that the old one bills to the right assumed usage-figure which the new ones then apply going forward. This should automatically happen in a change- over, but always double check on the first invoices and that the new supplier is not assuming crazy assumed estimated figures.
And you may need to also clarify any re-charges to any other occupiers, maybe through separate sub-meter readings and dealing with any adjustment-charges during the change-over.
Utilising the Best Utility Deals
As you face the effects of paying utility charges like gas and electricity, whether directly or indirectly through, say, a service charge, then go through these above six-factors to make sure you’re on the right track.
This will help you get the best deal now and stay on track for future changes as well.
Whilst these are focused on the end-charge with the actual utility provider, once you dovetail with the actual level of consumption-side of things like installing new energy-saving LED bulbs, then you’re really starting to apply some savvy property-management techniques to manage your liabilities.
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