G15 predicting 207% increase in cost of gas contracts next year
Large London housing associations are estimating average gas price hikes of more than 200% next year, with one housing association being quoted prices that are 670% higher than what they currently pay.
Large London housing associations are estimating average gas price hikes of more than 200% next year, with one housing association being quoted prices that are 670% higher than what they currently pay #UKhousingMembers of the G15 have estimated that the cost of gas contracts will increase by 207% next year, while the cost of electricity is set to increase by 32.7%.
Geeta Nanda, chair of the G15 and chief executive of Metropolitan Thames Valley, said that gas prices are “extremely volatile” right now, adding that rising costs are set to impact housing associations’ budgets during an already challenging time for the sector.
It is understood that one G15 member has been quoted prices that are 670% higher for gas and 255% higher for electricity, but it has not bought at that price as it is working with brokers to get a better deal.
Ms Nanda said: “We’re working hard to find the best deals, but there is no getting away from the fact that prices are higher across the board and that will be felt by organisations and our residents. Whilst the finances of the sector are strong, absorbing yet more cost pressures adds up.”
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Housing associations mostly acquire electricity and gas for communal areas, with residents often sourcing their own utility suppliers.
However, social landlords sometimes acquire energy for properties, for example for accommodation that people may live in for only a short length of time, such as refugee accommodation or housing for people fleeing domestic abuse.
They also acquire gas for communal heat networks. Residents living in homes powered by heat networks are particularly vulnerable to rising gas prices as they are not protected by any cap on the prices.
The cost of providing energy can be passed on to leaseholders or tenants via service charges.
Ms Nanda said that G15 members will “look at what can be done to soften the impact for tenants” where they provide gas and electricity to homes and buildings.
Households in the UK are experiencing soaring energy bills due to a worldwide shortage in energy supplies.
Ofgem, the UK energy price regulator, has agreed to raise the cap on how much households can be charged for energy.
Social landlords have previously voiced fears that tenants could be forced to choose between heating their homes and eating as a result of soaring prices.
In response to rising costs, the government has previously announced a £200 discount on energy bills, to be paid back by households over the next five years, alongside a £150 council tax rebate for households in bands A to D.
Ms Nanda said that this support is “welcome” but that it is “clear that the spiralling price rises in the market must be addressed and people will need far more government-led support in the months to come”.
As part of his Spring Statement on Wednesday, the chancellor doubled the government’s Household Support Fund – which can be used by councils to support struggling households – from £500m to £1bn.
However, a number of leading housing and homelessness organisations criticised the statement for not going far enough to mitigate the impact of inflation on low-income households.
Wholesale prices are rising even further due to the invasion of Ukraine by Russia, which is the world’s largest natural gas exporter.
A number of social landlords are currently exploring options for getting out of their contracts with Russian energy giant Gazprom.
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