Opinion: Social landlords are becoming utility providers
Published by Max Salsbury for 24dash.com in Housing and also in Environment
By Case Cole, managing director, Guru Systems
Ofgem’s announcement this week to launch a full-scale probe into energy competition and pricing didn’t come as much of a surprise to anyone – least of all the ‘Big-6’.
Soaring bills are not only damaging to our fragile economic recovery but disproportionately hurting low-income and social households.
We all know registered providers are working hard in this area, providing information to tenants on energy usage and ensuring that new and retrofitted homes are energy efficient.
But helping tenants reduce their energy bill with solutions such as energy display devices and low-energy consumption retrofitting is only one side of the coin – the other relates to RPs becoming utility providers in their own right.
District heating, brought up-to-date by the likes of Guru Systems, continues to be the most effective way for RPs to meet carbon reduction requirements for urban developments. As a result, RPs have found themselves not only in the role of landlord, but also in that of utility provider.
At first this might seem an unfamiliar role, but in many ways RPs are much better suited to providing utility services to their tenants than the Big-6.
Looking at the big energy companies, you find a profit driven culture with minimal consumer engagement, where attractive tariffs are used to lure in new customers, and ‘sticky’ customers are saddled with higher prices.
Over the last four years, while increasing numbers of people have struggled to make ends meet, profits have risen among the big energy suppliers and there’s a growing feeling that energy consumers are being taken for a well-coordinated ride.
Contrast this to the majority of social landlords who are dedicated to customer fairness and measure their effectiveness on fostering interaction with the most vulnerable. Chalk and cheese.
So when social landlords do assume the role of energy provider, these core values are replicated in their approach: lots of face-to-face contact with the consumer and same tariffs across the board (so no punishment for the most vulnerable or ‘non-conforming’ customers).
Social landlords also can’t make a profit from providing heat to their customers, so 100% of the benefit of low-cost generation is passed onto the resident.
But here comes the challenge for RP Energy Co: if you can’t make a profit from your customers then you’d best be sure that you don’t make a loss. It’s crucial that you run your energy systems as efficiently as possible, and accurately measure your input and output costs.
There’s no doubt that in many ways social landlords are better suited to providing utilities to their tenants than the big energy companies. At the same time, RPs must ensure that systems are as efficient as possible and costs are passed through accurately to residents. Otherwise they risk shifting the debt burden onto their own shoulders.