Most occupiers of commercial multi-let buildings will be paying for electricity via two routes. However, do you know what you are paying and whether this represents good value for money?
The electricity cost that may be more ‘visible’ to you will be what you use within your own space. This will be electricity consumed by lighting and small power, office equipment, computer rooms and other common uses.
The cost of this electricity could be invoiced to you by your Landlord’s managing agent, or you may pay the supply company directly and arrange your own supply contract. If the managing agent invoices you then your usage will often be measured by sub-meters, that record your consumption. However, in cases where sub-meters are not fitted, your consumption may be based on your occupied floor area in relation to other occupiers.
You will also be charged a portion of the electricity that is used by the Landlord’s plant (e.g. chillers) and within the common parts. This cost will form part of the service charge and is usually assessed on a floor area basis.
Assessing whether or not you are paying a fair price for electricity is no easy task, as the commercial electricity supply market is complex. However, there are a few things you can look out for to sense check your costs:
• If you have a fairly typical office fit-out then how does the electricity cost compare to your other locations, and to published benchmark data?
• If there are sub-meters, then are you able to take monthly readings and compare these to those being used by your Landlord to charge you?
• Check that there is no double charging between the service charge and individual occupiers’ usage. This can be achieved by obtaining the electricity bills for the main meters (MPANs) and then assessing the electricity cost within the service charge and individual occupier costs.
• Could you be paying for someone else’s electricity? Have the distribution boards in the building been checked to see whether landlord and tenant supplies are correctly labelled, and that tenant supplies are correctly configured for the current lettable units?
• An assessment of half-hourly data can be helpful. If the building electricity consumption is large enough then it will be fitted with half-hourly meters. An assessment of the data could show, for example, that plant is unnecessarily running overnight when the building is unoccupied.
• Challenge your landlord to disclose full details of the electricity supply contract and explain how this was procured. There can be wide variations in pricing between different suppliers, and contract terms that may be unfavourable when it comes to reducing energy consumption.
Assure are not energy consultants or brokers, but we are lease expense managers with specialist expertise in assessing all aspects of your occupancy costs and helping to make sure that you are not overcharged.