UK’s first ever prepayment tariff for affordable social housing tenants goes live
Jun 01, 2015 by Spark
Ofgem derogation allows fifth Spark Energy tariff - Spark Energy, the niche energy supplier for the lettings market, today introduced a special tariff aimed at prepayment meter (PPM) consumers living in affordable social housing.
The tariff is aimed at making it possible for these customers to have a dual electricity and gas supply for as little as £2 a day - and is available to all social housing tenants whose providers partner with Spark.
The new PPM Lite tariff is the UK’s cheapest prepayment tariff, and the only one that doesn’t have ‘hidden’ charges in the form of a standing charge.
The tariff is specifically designed for social housing tenants, who tend to be low energy users.
Based on a “low user” as defined by regulator Ofgem, users of the new tariff can save £110 per year against being on a standard Big Six PPM tariff – an average throughout the UK of £772.04 as opposed to £882.59.
The new tariff will have:
- No tie-ins or exit penalties.
- A zero standing change to reduce the impact on customers with low levels of energy consumption and eliminate costs to housing bodies when properties are empty.
- A unit rate that’s comparable with Direct Debit tariffs.
- Paper statements as standard - but an online account will be provided.
Spark has been given a derogation, which is official permission, by regulator Ofgem that enables the company to offer the additional tariff alongside the four core tariffs allowed under standard Ofgem rules.
Spark has been working with housing providers over the last year to identify what the key issues are for them and their customers. The providers were clear that tackling costs and delays during property voids, and the tariffs their customers were being charged, were their biggest issues.
The new market-leading tariff brings lower cost energy to those that can least afford to pay higher bills, and often haven’t gained from being able to switch.
In addition Spark has created a full void energy management service at no cost to housing organisations. Social housing providers said they had some major energy issues during void periods that led to delays in voids as well as direct and operation costs, often adding up to tens of thousands of pounds. In particular:
- The housing provider being pursued for debt from previous tenants.
- Delays in electrical testing and void repairs because of no electricity in the home.
- Staff having to go to shops to top-up key cards.
- Staff spending hours on the phone to energy suppliers to manage energy supply and bills.
- Standing charges racking up during void periods.
- No energy being available for when new tenants move in.
Spark Energy CEO Chris Gauld said: “People in social housing are on the lowest incomes, use PPM far more and are not actively engaging in the supplier market to find cheaper deals. They are uniquely disadvantaged in the market and are disproportionately affected by this.
“We have been working with Ofgem to find a way of creating a solution to this problem, and we’d like to thanks the regulator for the flexibility it has shown on the matter of this derogation and their recognition of the knowledge we have in the sector.
“By creating this tariff we are addressing the issues that uniquely affect millions of homes, and by meeting the concerns of social housing providers we are helping them become actively involved in getting social tenants a better deal.”
Ian Thomson, executive director of customer excellence at First Ark Group said: "KHT, part of the First Ark Group, has an excellent track record on bringing innovation to the social housing sector and has been working to improve the energy efficiency of all its homes over many years. We are now taking this further and are actively looking at how we can increase operational efficiency and reduce our customers' energy costs and we welcome the creation of a social housing tariff that helps to address the needs of housing providers and customers alike".
Nicholas Doyle, director at housing consultancy Adecoe, said: “Over the last year, we have been working with housing providers all over the country and simply asked them what they wanted from an energy company.
Spark has taken this on board and created a unique tariff for social housing tenants and housing providers. This is something I have wanted to achieve for over 25 years when I worked in social housing, but we could never get the big energy companies to make the changes we knew mattered. PPM Lite is a major step to helping landlords and customers getting a better deal in the energy markets”.
See the coverage here.