Tariff Setting
Setting tariffs is critical to the financial health of a heat network. Getting them right means that customers get the right bills and only pay for the energy they use, and that schemes continue to be viable and compliant with regulations. Getting them wrong leads to overcharging, under-recovery and non-compliance.
Issues
Knowing what to include and how to include it can be challenging. With the Heat Network Market Framework soon to be implemented and mandated by Ofgem, as well as unprecedented utility price increases, ensuring tariffs are set correctly is more important now than ever.
A well-structured tariff will:
- Provide a pricing structure that is fair and in line with current and future guidance/regulations
- Ensure full recovery of heat network management costs
- Be transparent and easily understood
- Be based on accurate data and information
- Have a consistent approach to debt recovery, customer service and support
Chirpy Heat can provide a tariff setting and review service including:
- Reviewing and setting regulation-compliant tariffs for individual schemes or whole portfolios
- Reviewing tariffs set for externally managed networks
- Assessing data, identifying risks and developing core principles for your organisation
- Developing customer communications for tariff changes and reviews
Correct tariff setting can help to protect residents, improve customer satisfaction and reduce the risk of housing providers making financial losses on networks. Chirpy Heat will make sure that you get tariffs right for you and your customers.
Case Study
Chirpy Heat carried out a tariff review for a large housing association encompassing 14 schemes, the majority of which had a mixture of credit and pay as you go billing. Some residents were also being charged for water and communal electricity through their tariff. Some schemes were connected to networks owned by third parties, but the housing provider was still responsible for tariff setting and for contracting metering and billing arrangements.
Working closely with our client, Chirpy Heat identified the appropriate costs to include and created a tailored tariff for each scheme. All inclusions in the tariff were clear and transparent and were supported by bespoke resident communication letters and an FAQ created by Chirpy Heat for each scheme. We also developed implementation strategies to ensure the best solution for the client and their customers were delivered. Using the tariffs Chirpy Heat created has resulted in a potential saving in excess of £2 million over the following year.
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