Question 1

Overcharged for Gas

Accepted Answer

Q: 101 apartments in this retirement village are centrally heated by our RSL and costs are included in our service charges. In the first 10 months of occupation (June 2014 to March 2015) we were charged almost £90,000 for the supply of gas. On investigation, we discovered that there are no meter readings to justify this amount and that none of this money has been paid to a supplier. We were told that this is an accruel but no indication of this fact was stated in the summary of accounts. We have now been told that the estimated annual gas bill is about £30,000 per year. We have been repaid a small proportion of this overcharge, but we believe that there is still an outstanding balance, in residents’ favour, of approximately £100,000, including an accrual from 2015-16. The RSL is now saying that they will retain this money for some six years in case they do receive an account from the supplier. We have requested that a reserve/sinking fund account be prepared, audited and published and the accrual be deposited there, but a response has yet to be made. I believe that this is contrary to Ofgem’s principles and also very unfair as the RSL knows the estimated annual charge from the meter readings that they now have. Some elderly residents have died or left and will probably not benefit from any refunds. Residents on fixed service charges will probably not receive a refund although we have asked that they receive an ex-gratia payment in consideration of the errors made. Is this lawful and what might we do to recover this unscrupulous practice? FPRA Chaiman Bob Smytherman replies: Thank you for your query which has been passed to me for an initial response , but should say from the outset I am not qualified to advise on the legalities or otherwise. We will need to ask our legal adviser Nick Roberts to review your lease for that. On the broader principle you highlight, this is a significant concern to the FPRA, and has been for many years, as blocks of flats are treated as commercial premises rather than residential by energy providers. It's certainly not unreasonable in my view that if the service charges demanded have resulted in a significant overpayment for any such service, then these should be refunded as you describe. However, the problem is proving such a payment is an 'overpayment' and getting your landlord to acknowledge this without the need of a determination by a tribunal. As none of the apartments have their own meters assessing overall use age by the apartments will be difficult. It would certainly be good practice for a reserve fund to be put in place (subject to the lease) for any overpayments to be put aside for specific purposes but not just to inflate the landlords' coffers without justification. I suggest it may well be worth making a formal complaint about this to Ofgem as the regulator who will be advise on whether the RSL is compliant with current regulations. [Submitted June 2017]

Question 2

Overcharged for Gas

Accepted Answer

Q: 101 apartments in this retirement village are centrally heated by our RSL and costs are included in our service charges. In the first 10 months of occupation (June 2014 to March 2015) we were charged almost £90,000 for the supply of gas. On investigation, we discovered that there are no meter readings to justify this amount and that none of this money has been paid to a supplier. We were told that this is an accruel but no indication of this fact was stated in the summary of accounts. We have now been told that the estimated annual gas bill is about £30,000 per year. We have been repaid a small proportion of this overcharge, but we believe that there is still an outstanding balance, in residents’ favour, of approximately £100,000, including an accrual from 2015-16. The RSL is now saying that they will retain this money for some six years in case they do receive an account from the supplier. We have requested that a reserve/sinking fund account be prepared, audited and published and the accrual be deposited there, but a response has yet to be made. I believe that this is contrary to Ofgem’s principles and also very unfair as the RSL knows the estimated annual charge from the meter readings that they now have. Some elderly residents have died or left and will probably not benefit from any refunds. Residents on fixed service charges will probably not receive a refund although we have asked that they receive an ex-gratia payment in consideration of the errors made. Is this lawful and what might we do to recover this unscrupulous practice? FPRA Chaiman Bob Smytherman replies: Thank you for your query which has been passed to me for an initial response , but should say from the outset I am not qualified to advise on the legalities or otherwise. We will need to ask our legal adviser Nick Roberts to review your lease for that. On the broader principle you highlight, this is a significant concern to the FPRA, and has been for many years, as blocks of flats are treated as commercial premises rather than residential by energy providers. It's certainly not unreasonable in my view that if the service charges demanded have resulted in a significant overpayment for any such service, then these should be refunded as you describe. However, the problem is proving such a payment is an 'overpayment' and getting your landlord to acknowledge this without the need of a determination by a tribunal. As none of the apartments have their own meters assessing overall use age by the apartments will be difficult. It would certainly be good practice for a reserve fund to be put in place (subject to the lease) for any overpayments to be put aside for specific purposes but not just to inflate the landlords' coffers without justification. I suggest it may well be worth making a formal complaint about this to Ofgem as the regulator who will be advise on whether the RSL is compliant with current regulations. [Submitted June 2017]

Overcharged for Gas

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