Section 20 dispensation: Information for affected customers

If you have received a letter from us about buying energy for your scheme, this is where we will post relevant updates, answer questions and keep a record of the letters we have issued to you.

We know that current world issues and the increased cost of living are putting enormous pressure on people’s household budgets. We also understand that the uncertainty caused by not knowing how these issues may affect you from year to year can be very worrying.

That’s why we are working to try to ensure we get the best rates possible when we buy gas and electricity for your scheme.

We would like to apply to the First Tier Property Tribunal for legal dispensation, so that we can work more quickly on your behalf to secure the best deals on energy. Seeking dispensation means we can move from buying only 12-month contracts to being able to secure two- or three-year deals if they offer better value for money or more stability. We hope that this will lead to savings which we will be able to pass directly to you.

We will be posting relevant updates on this page as we go through the process.

Q&A

How much money will I save if Orbit achieves a Section 20 dispensation?

We can’t guarantee that this process will save you money year on year, because it all depends on world utility prices at the time. We do know that the longer-term deals tend to offer the best value, so seeking the dispensation is about having the flexibility to be able to achieve the best deal on behalf of customers at the time of contract renewal.

As an example:

We asked suppliers to provide us with up-to date prices for gas and electricity in May. We requested prices for utilities from April 2026 until March 2028 and found that purchasing gas on a two-year contract was on average 3% cheaper than a one-year deal. In addition, electricity was between 1% and 3% cheaper on the two-year deal, depending on supplier.

Our energy broker (EIC) explained that longer-term deals have the potential to be cheaper, especially during periods of instability. Global conflicts, tariffs and political uncertainty all make short-term wholesale prices difficult for suppliers to estimate so they increase their prices to factor in this risk. These wholesale prices typically make up 40% of your bills. The other 60% consists of taxes and infrastructure charges. Longer-term contracts also protect you against any increases in these costs over the contract length, again saving you money.

What is an energy broker?

Orbit is responsible for over 1,800 separate electricity and gas meters across all its schemes. To manage these, we use an energy broker who is responsible for finding the most competitive utility rates on our behalf. They are also responsible for checking the utility bills are accurate and raising any disputes with the utility suppliers on our behalf. At the moment our energy broker can only purchase 12-month contracts and can’t use their full expertise to get the best deal for us.

What happens if a short-term deal is better value?

We would only ever use the dispensation powers if it meant we could secure more favourable rates. We make decisions in the best interests of our customers and always seek the deal that offers the best value for money and the most stability at the time of renewal. If a 12-month contract was the cheapest and best value at that time, we would select it.

Why can’t I have a direct account with a provider and pay my utility bills myself?

While the exact set-up is different at every scheme, usually the communal electricity and gas charges relate to energy use in the communal spaces. As this needs to be fairly divided between all homes at a given scheme, we pay the utility bill and then charge all properties impacted in a fair way.

In some cases, we bill customers for the electricity or gas used in their home. This is because the scheme was built without individual metering connections for each home.

Whilst we cannot change the metering set-up, we can achieve a cheaper rate for customers by buying as a group, rather than as individual addresses. We bill you at the same rate and we don’t take any cut or profit.

What are the rates for 2025-26?

For any property with a gas supply the unit rate charged by our supplier is 4.7455p/kWh (excluding VAT) and applies to all gas consumed from 1 April 2025 until the 31 of March 2026.

As we aggregate the gas consumption from 90 of our schemes we are able to get favourable rates from utility companies. Our rates are 32% cheaper than the domestic price cap which is currently set at 6.99p/kWh (April – June 2025).

The electricity rates charged at each of our schemes vary by region and postcode. However, the average unit rate for the portfolio is 23.27p/kWh. This is 14% cheaper than the domestic price cap rate of 27.03p/kWh.

Why are gas and electricity prices so high?

The UK is very dependent on natural gas for heating and electricity generation. Following Russia’s invasion of Ukraine, gas supplies to Europe were severely disrupted, and this increased prices.

In the UK, a large portion of electricity is still generated using gas-fired power stations which is why the situation impacts both gas and electricity prices.

There are also additional costs because, between 2021 and 2022, over 30 energy suppliers went bust, mainly due to poor risk management and the unexpected spike in wholesale prices.

The costs of compensating affected customers and redistributing their accounts added pressure to the overall system.

What can I do if I am struggling with my bills?

If you are having difficulty paying your energy bills there is help available. Our dedicated webpage is full of advice and support and can advise you on the steps best for you.

www.orbitcustomerhub.org.uk/help-support/your-energy-our-support/

Why is Orbit only doing this now?

Until relatively recently energy prices were much lower and made up a smaller part of your service charges. In addition, energy prices were less susceptible to sudden price rises. This meant there was less need, or benefit, to lock into longer-term contracts.

How can I have my say?

We want to hear your views on our plan to seek Section 20 dispensation. You can complete our survey by Friday 20 June and one of our team will respond to any questions or concerns you raise.