Following the implementation of the Electricity and Gas (Internal Markets) Regulations 2011 tenants now have the right to choose their own gas and electricity suppliers. Until 10 November 2011 landlords of multi-tenanted buildings generally chose a supplier and billed tenants for the power used, and tenants had no rights to request an alterative supplier. However, all tenants can now ask the landlord to allow a competitor supplier to distribute power to them via cables and electricity systems in the building.
The Regulations have been introduced by the UK Government to implement requirements imposed by the Third Energy and Gas Directive. They are intended to make all power distribution systems available for use by anyone, with the hope that giving customers a choice of suppliers will encourage competition and drive down energy costs.
Landlords are not required to volunteer the choice to their tenants, but if they do receive a request they must respond within 10 working days confirming either that they will facilitate the change or explaining their grounds for refusal. If a change is to take place, the landlord will need to install any additional infrastructure required and must allow the tenant's chosen company access to carry out necessary work and take meter readings. Landlords may therefore consider it worthwhile to review their current supply arrangements, as it may be possible to improve the terms of supply and therefore reduce the incentive for tenants to request their own supplier.
However, there are limitations on the tenant's right: the tenant must be able to obtain a better energy deal than is currently offered by the landlord; and the landlord can refuse the request in some circumstances - for example if the cabling within the building does not have sufficient capacity and it would impose a substantial adverse financial burden on the landlord to upgrade it. Additionally, the tenant (or power supply company) must bear all costs of physically changing cabling, and such costs may well outweigh potential savings for many tenants.
On the plus side for landlords who are subject to the Carbon Reduction Commitment Energy Efficiency Scheme, if tenants do change to a direct supply, their energy consumption will not count towards the landlords requirements under the Scheme
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.