Residents awaiting safe cladding hit by energy bills double whammy

The communal heating system at New River House is not covered by Ofgem’s price cap on domestic energy, reports Simon Allin, Local Democracy Reporter

New River House in Southbury Road, Enfield Town

Residents in Enfield Town already hit by cladding safety issues have now been stung by huge hikes to their energy bills – because their heating system falls outside the government price cap.

Leaseholders at the New River House development – a group of three blocks of flats in Southbury Road built in 2013/14 – say they have been paying an average of around £200 per month extra on their bills because they are supplied by a communal heating system that is not covered by Ofgem’s price cap on domestic energy.

The residents’ management company (RMC) that has to buy the gas for the development is classed as a business rather than a domestic customer – and because it has no assets it fails credit checks, meaning many energy providers are unwilling to offer it a contract.

It comes as residents continue to wait for external cladding to be replaced, after it was deemed a safety risk following the Grenfell Tower fire.

Gill Cole, who owns a leasehold flat at New River House, said leaseholders had been paying an average of around £200 extra per flat since November after being moved to a new contract with energy firm Pozitive Energy.

With the bills not based on individual households’ usage, Gill said that even if residents kept their heating off they would still have to pay the extra £200 per month. In her case, the extra amount comes on top of an annual service charge of just over £2,000.

“People are completely trapped,” Gill said, adding that some are “desperate”. “No-one really wants to pay that kind of money,” she said.

Gill said recent negotiations to extend the contract with Pozitive Energy from one year to at least two years meant the extra energy charge was set to drop to below £100 per month from April – but residents are keen to claw back some of the money they have already paid.

Alexandra Manu, who lives in New River House, said she was considering renting out her spare room to cover the extra energy costs, which come on top of payments of around £2,500 per year for service charges and £1,500 per year for cladding insurance.

Adding that the price hikes had left her with little remaining disposable income, she said the situation for some residents “is just not sustainable at all”.

Raj Lal, another resident, said there were around 200 leaseholders living in the development and those occupying larger flats had to pay more because the charges were calculated per square metre rather than being based on usage.

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He said: “For me, at the moment, it has had a significant impact. It is an extra £200 that was part of my disposable income that is now not.

“I have had to renew my mortgage, and that is an extra £300 per month. To have this together makes it tough. I feel worse for families who are living in the block.”

Some residents criticised the RMC and management agent HAUS Block Management for negotiating the contract with energy provider Pozitive Energy, claiming the deal was made without the input or consent of most of the residents.

Nigel Thomas, head of property management at HAUS, which works on behalf of the RMC, said gas costs had increased following a supply shortage and the war in Ukraine. He said that when it came to renew the contract, the RMC “faced the full costs of gas, even with the government’s much more limited business energy support scheme in place compared to the energy price cap that applies to residential customers and is more generous”.

He added that many commercial gas suppliers were unwilling to supply gas to companies such as RMCs “as they have no assets as such and so fail credit checks”, claiming Pozitive Energy had been “the only viable supplier”.

Nigel admitted the contract was negotiated “at the peak of the market” but that it was “only with hindsight that this is known”. He said HAUS had sought to terminate the existing contract and to seek terms from the supplier Pozitive Energy, adding: “It has been difficult to get these and to get accurate figures from them. The most recent figures are punitive and do not make economic sense.”

He added: “We are sorry that leaseholders have been so adversely affected by the energy crisis at New River House since October 2022, and I can assure you that we are making every reasonable effort to mitigate the unexpected costs that leaseholders are facing.”

Addressing the cladding issues, Nigel said New River House was approved as eligible to make a Building Safety Fund application in November 2021, having first applied to the fund in June 2020, and a full costs submission made to the fund is now under review.

When approached for comment, Pozitive Energy stated that early termination fees to exit the energy contract would have been calculated as per the terms and conditions on the company’s website.

A government spokesperson said: “We know this is a difficult time for families, which is why the government has covered around half of the typical household’s energy bill this winter.

“Heat network customers are receiving support through our energy bill relief scheme and will continue to receive a discount on their energy bills until 31st March 2024 through our energy bill discount scheme.”

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