By now almost everyone on the Woodberry Down estate with energy supplied by Berkeley Homes and billed by Insite will have received notification of energy price rises.
In our conversation with other Residents' Associations at Woodberry Down we know that the amount of the increase varies widely between buildings.
The Park Collection Residents' Association (PARKRA) will be joining the other Residents' Associations to approach Berkeley Homes (BH) for an explanation of the apparent anomalies and details of how the amount of increase was arrived at.
Do you want to know Berkeley Homes explanation of how the increased charges were arrived at?
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It can clearly be seen from the graph of wholesale gas prices that an increase was inevitable (see the graph below). Our heating and hot water is supplied by BH on what should be a break even basis. The role of Insite is to communicate with residents and to collect payment for the supply.
As a Residents' Association we intend to co-operate with other residents' associations on the estate and to engage in a dialogue with BH to understand better how this energy supply works.
Originally Posted by Adrian Essex on December 31, 2021 at 7:15am in R&RBH
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For those interested in these things, the chart below illustrates the price we pay (red line) for the GAS we use (which is not covered by the Ofgem price cap) and the equivalent price (blue line) for GAS that is covered by the price cap. The actual wholesale gas price is the volatile black line.
The chart shows that although we have been paying more for our GAS than the Ofgem price cap, this will reverse if the worse-case forecasted increase in the Ofgem price cap occurs in October and again in January. We would then be paying less for our GAS than we would under the Ofgem price cap.
Sept 2022 UPDATE:
This is an update on the above chart to reflect the "Energy Price Guarantee" that has recently been announced, since the change of Prime Minister. This is due to start from 1st Oct 22 and last for 2 years. This chart relates to kWh consumption and not the standing charge.
For avoidance of doubt, a 'price cap' or 'price guarantee' is NOT a cap on bills. It's simply a restriction on what can be charged per unit of consumption to domestic customers on standard variable tariffs. If you're on a fixed price tariff or a local heating system, it does not apply.
As can be seen (red line versus green line), we are now paying LESS for the wholesale gas that we buy than the cost of gas charged to domestic customers (on the standard variable tariff).
Remember, that our tariffs are HEAT tariffs not GAS tariffs. We need to buy approximately 3 kWh of gas for every 1 kWh of heat, to cover heat losses in the system. This is reflected in our HEAT tariffs.
5th April Update:
Latest update is that Berkeley's wholesale gas traders appear to have secured a 12-month contract priced at 9.5p/kWh, up from around 6p/kWh last October. This is better than the 13p/kWh they were previously being quoted. The traders took advantage of a dip in prices to lock-in the 9.5p price.
Further formal communications from Insite/Berkeley are being prepared and will be sent out soon. However, it does mean that heat tariffs will increase again. The Block F consumption tariff, for example, can be expected to rise to around 28.5p/kWh (up from 18p). Whether the daily charge increases will depend on the standing charges imposed by the gas supplier and whether these have changed.
21 March Update:
The latest information from my discussions with Berkeley and Insite's CEO is that they are still trying to negotiate a new gas supply contract during these difficult times. Nothing has been confirmed yet but the following seems to be the situation:
a) A further tariff increase seems highly likely as wholesale gas prices have not returned to Sept/Oct 21 prices (and they are not likely to).
b) Gas price volatility continues to be extreme so Berkeley's traders are trying to avoid locking in a very high price for wholesale gas as this is not in our best interests.
c) It seems as if Berkeley are likely to introduce a self-imposed cap on the cost of wholesale gas that they pass on to us and which will lead to Berkeley absorbing the gas price fluctuation above this level.
d) If and when gas prices fall to a 'more reasonable level' (under the current circumstances) they will then seek to lock-in a longer supply contract.
A further consumption tariff increase 60-70% is not out of the question, in my opinion. This would increase 18p/kWh to around 30p/kWh.
It's important to note that if wholesale gas prices fall, our consumption tariff falls as soon as the fixed supply contract is due for renewal. This would be a much faster fall in prices than most other residential customers experience on regulated tariffs.
It is also important to note that in the negotiation of the gas supply contract, two things are negotiated:
1/ the cost per therm for the supply of gas (which determines the p/kWh tariff)
2/ the gas supplier's standing charge (which is a component of our daily fixed charge)
With summer fast approaching, it is not unreasonable to assume that demand for natural gas will fall, along with prices. This will allow traders to find better deals for fixed cost supply. However, there remains speculation about the cost of gas next winter.
Keep in mind that electricity prices are driven by gas prices, even if you are on a "100% renewables contract". So electricity prices are volatile and have gone up too.
There's been a big surge due to Russia's invasion of Ukraine, to well over double the price fixed in October. If this level is maintained, this would feed directly into the next revision of the heat consumption tariff. 18p/kWh would rise to around 48p/kWh given the wholesale gas price on the 7th March 2022.
Nothing confirmed from Berkeley/Insite yet. In February they were trying to negotiate a three month extension to the current contract on the same terms. This seems unlikely given the invasion.
Originally posted by Mike Price January 27, 2022 at 7:57pm
Based the latest information from Berkeley Homes, the most recent Energy tariffs were based on a gas-supply contract renewal date of 1st October. This date seems to have been the same across all of the development. For information, the wholesale gas price trend since then is shown below. Note that the price we pay for heat (per kWh) will be higher than this price due to boiler and system inefficiencies ('heat loss').
For context, the chart below illustrates how different (and hopefully exceptional) the recent wholesale gas prices have been relative to historical prices.
Originally posted by Mike Price January 27, 2022 at 8:02pm
This is the response received from Berkeley Homes in response to a letter sent jointly by all the Residents' Associations (RA) requesting further information about the energy tariff price rises. (John & Tom are from longer established RAs with whom we are collaborating.)
Dear John, Tom and residents,
Thank you for your email and attached letter dated the 21st January 2022. Further to Brian’s email yesterday, please see our full response as follows:
We are sorry to hear that Insite Energy has not responded to your letter dated the 22nd January 2021. We have discussed response times with Insite Energy as well as the importance of being clear in their communication. Furthermore, upon review, we have also noted some errors with some of tariffs provided to you on the 16th December. Insite have been instructed to issue new letters shortly with the correct tariffs for each phase. Were there have been changes these are have all been to the customers’ benefit.
To summarise the current position;
In response to the points raised by you to Insite on the 22nd December 2021;
Our next step we would suggest a residents’ meeting in early February on a date that suits you, where Berkeley Homes and Insite Energy representatives will be present to offer further clarification. In the meantime, if you have more questions you would like covered in writing, please feel free to let me know.
Thank you again for your continued patience, cooperation and understanding.
Kind regards
Ryan
Ryan de Pledge
Estate Operations Manager
Originally posted by Mike Price February 6, 2022 at 10:39am
Further information has now been provided by Berkeley Homes/Insite Energy. We are continuing to seek further clarification of some of the details but the latest tariffs are based on the following information. Park Collection is 'Block F', Hartingtons is 'Block D'.
The letter dated 27 Jan 2022 from Insite does not reflect the latest standing charge figure for Block F, which has been further reduced because of recalculations of system heat loss.
Tariff setting is difficult because the amount of heat that is lost by the building (including the plant room) has to be estimated and then compared with historical measurements. This leads to deficits/surpluses arising which then need to be accounted for.
The contract price for the gas is determined by market forces and suppliers bid for the contracts. The higher the price of gas the higher the cost of the heat lost in the system too. As wholesale gas prices remain volatile, expect that the heat tariff will also change more frequentlyl than annually to reduce the deficit/surplus balance.
The variations in price across the different buildings groups is due to different boilers, building design, age of contracts, and various other factors.
Originally posted by Mike Price February 10, 2022 at 10:10am
Insite only has average energy consumed per flat per building group. However, based on their figures and the national averages for gas consumption, based on number of bedrooms and adult occupancy, I have produced the following table to illustrate potential heating bills. These figures may be conservative. More data needs to be collected.
The table also includes the cost of maintaining the boilers that is included in our service charge. The right hand column shows the financial saving we are making by being in thermally efficient flats and also reflects our reduced carbon emissions (even after taking into account the heat losses in the system). These are tentative figures which you might like to compare with your annual statement when you receive it from Insite after the end of March. The table is for Block F. Blocks D and B will be slightly higher due to a higher standing charge. As yet, Insite has no average consumption data for these buildings.
Originally posted by Mike Price February 10, 2022 at 9:56am
Latest update following multi-RA meeting (over 3 hours) with Berkeley and Insite last night (9th Feb):
Unit prices and standing charges now correct until next tariff review. Insite will be issuing annual statements from end March showing annual heat consumption and transactions. They will also be releasing a new web app (end Q1/Q2) so that we can see this detail online.
Berkeley contracts for gas across all its sites to achieve economies of scale. Previously contracts were renewed every 12 months. Currently they are being renewed every 6 months with a further 3 month extension being sought after the first 3 months. So this extension is currently under negotiation. Expect tariff reviews every 6 to 9 months, therefore, but tariffs may not change.
Standing charge can be expected to increase with RPI (inflation).
Unit prices are determined by wholesale gas prices (currently very volatile and unlikely to go down in the foreseeable future) and by the loss of heat in the plant rooms and buildings (heat loss is normal).
The heat losses in the system are under review, with a report on KSS1 (the oldest building with the biggest losses) due in about 3 months.
The contractor used to maintain the heat systems is being reviewed with greater emphasis being placed on ensuring that all systems are being run optimally (minimum heat loss). It seems that this has not been done reliably in the past. Also, an audit is being carried out to ensure that all systems are fully understood and that the appropriate measurements can be taken and to explore the possibility of capturing and reusing lost heat.
If heat loss can be reduced, then unit prices would reduce. If gas prices fall, unit prices would come down.
Insite Energy and Berkeley, along with others in the industry, are lobbying the regulator (Ofgem) and the Goverment to have community heating systems, such as ours, fall under the Ofgem regulations. This would impose a price cap on the cost of wholesale gas. Currently, community heating systems are treated as commercial customers and therefore the price cap does not apply. (Wholesale gas suppliers who supply the likes of British Gas's retail customers are currently supplying gas at a loss due to the Ofgem price cap and therefore have to make up for that on their sales to commerical customers.)
Not all building groups have the same equipment in their plant rooms and this leads to different calculations. Some have gas boilers only, some have combined heat and power (CHP) and some seem to have both. Those with CHP are also generating electricity which is used to help meet the communal electricity demand and this should lead to lower electricity bills within the service charge. However, heat loss (and perhaps maintenance costs) is greater with CHP. The Government is encouraging the use of CHP on all new developments.
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