Factsheet 5 - Maximum Resale Price of Gas and Electricity

      

Maximum Resale Price of Gas and Electricity

Changes from 1st January 2003

(Electricity Act 1989 and Gas Act 1986)

Scope:

The Regulations relate to the maximum price that a landlord can charge tenants for gas and electricity for domestic use.  Anyone selling gas or electricity for domestic use from a supply provided by a supplier must comply with these regulations.

OFGEM (The Office of Gas and Electricity Markets) fixes maximum resale prices under section 44 of the Electricity Act 1989 and section 37 of the Gas Act 1986.  The Utilities Act 2000 amended these provisions to give OFGEM the power rather than the duty to set a Maximum Resale Price (MRP) for gas and electricity.

The new MRP varies depending on your area, and consists of:

  • a charge for each unit of gas or electricity used by the tenant plus VAT; and
  • the cost of the gas or electricity supplier’s standing charge divided equally between the tenants

These changes bring the provisions for electricity resale into line with those for gas.  Until 1st January 2003, the landlord had been able to recover a daily ‘availability charge’ which was payable whether or not the tenant used the electricity on the particular day so long as the supply was available.  It is now the case that landlords will not be able to charge tenants more for electricity than they have paid for it.

In addition, to ensure transparency, at the request of the tenant, the landlord must inform the tenant the price he is paying for gas or electricity and furnish documentary evidence to support this information.  This is enforced by financial penalties.  A landlord who overcharges will also be subject to such penalties.  These penalties will be enforced through the civil courts.

Sources for Further Information:

  • Office of Gas and Electricity Markets - London office - 9 Millbank, London, SW1P 3GE - Telephone: 020 7901 7000 Fax 020 7901 7066 - www.ofgem.gov.uk