Transferring Utilities – Navigating the Pitfalls
The Role of Utilities in Asset Transfers
When assuming responsibility for the transfer of a community asset, community organisations need to be able to demonstrate to the transferor, potential funders, and their own supporters that they have a viable, long-term project with realistic predictable operating costs that allow for changing circumstances. You will doubtlessly have produced an operating budget, but have you fully understood the impact of gas, electricity, and water costs?
Your business plan should include information on expected overheads and utilities will form an important element.
ESTABLISHING A REALISTIC UTILITY COST
When preparing for an Asset Transfer, utility costs can easily be overlooked. Before starting, you should undertake an audit to identify all gas, electricity and water supplies already in place and evaluate their size and condition.
This is important because you could find yourself paying too much for oversized utility supplies or find that the currently installed capacities will be inadequate for the purposes you intend. Either way, this could be costly.
ARE THE UTILITIES FIT FOR PURPOSE?
By confirming that the condition and capacity of incoming supplies match your site’s anticipated requirements you could save time and money. Many utility costs relate to the size of pipework and meters. If the building previously had large incoming supplies, you could be inheriting higher than necessary metering charges.
An example of this would be where a previous occupant required high capacity gas boilers resulting in the need for a large gas meter. Apart from actual gas consumed, gas bills are based on the size of the meter. The larger the meter, the higher the cost. Some large meters can cost thousands of £’s every year.
Another example is where you may require high capacity electricity or water supplies. If the current infrastructure is not adequate, the cost of upgrading them can be high.
If you would like us to evaluate the current capacities of gas, electricity of water supplies, contact us.
HELP AND GUIDANCE
The Energy Action Group (EAG) has in depth experience of managing the transfer of utility services (gas, electricity, and water) for organisations taking over property portfolios or single buildings under Asset Transfer schemes. We know how disruptive the process can be if not handled carefully.
Often, the local authority transferring the asset, is understaffed, and dealing with numerous other urgent matters. Utility issues take a back seat and supplies can become orphaned during the transfer process with neither party fully aware of the situation. It can be difficult to fully establish the portfolio of meter assets and supplies. Not doing so presents a risk of energy being consumed without payment or budgeting arrangements in place. This can lead to calamitous arrears with severe financial implications and even disconnection of services.
Local Authorities manage significant numbers of energy and water supplies with individual supply contracts absorbed into large framework portfolios. It is therefore essential that the local authority provide full copies of the last utility bill for each supply, so the new management team has all necessary information relating to the new utility portfolio. We recommend these are secured early in the process to enable proper budget preparation and utility management.
WHAT DO YOU NEED TO DO?
The EAG can help ensure an orderly Change of Tenancy (COT) process. This should take place in the weeks running up to the transfer date, but we can also help untangle things retrospectively if some supplies are not identified in advance. We will help you correctly identify all services on site and gather the essential unique supply point identification details.
You will also need to establish the required capacities for your gas, electricity, and water supplies. If you don’t have sufficient capacity, you could find your equipment unable to function properly. This involves carrying out an audit of all equipment to be installed on site.
We can assist with estimating annual kilowatt consumption, capacity and supply demand and the annual cost for budget planning.
We will research the market for the best tariffs for your sites and seek quotes that share a common contract end date with the Energy Action Group Buying Basket, so that you can participate in the annual bulk energy basket tendering. By aligning contract end dates this will make your utilities much easier to manage, with less burdensome administration through the year. There is no obligation to accept the quotes we find, nor is there any cost to you to belong to the Energy Action Group.
Take Meter Readings
It is critically important to take readings of all gas, electricity, and water meters, backed up by photographs, on the day of transfer when responsibility for the asset changes hands.
We wish you success with your Asset Transfer negotiations and very much look forward to assisting with a smooth and managed transfer of the utilities involved.
Contact us for help and advice when planning your next Asset Transfer.
