Open up your energy procurement opportunities with Section 20 dispensation

Last week our Managing Director Arjan Dosanjh spoke about Section 20 dispensation at Clarke Willmott’s London Social Housing conference. The terms ‘Section 20’ and ‘dispensation’ may not mean anything to you right now, but fear not, we are here to help you with that. The first thing you should know is that it holds great potential for Housing Associations to make financial and energy savings via intelligent and flexible procurement strategies.

In this article, we have stripped away the swampy details of the subject and laid bare the three most important takeaways from Arjan’s talk. So, let’s get this straight, what is Section 20 and how can Housing Associations benefit from breaking free of it?

Arjan Dosanjh

Firstly, what is Section 20?

Under the Section 20 Act, a Housing Association cannot enter into contracts beyond 12 months in length where the final costs are passed onto tenants – as is the case with energy bills.

Dispensation

In order to proceed and enter into an energy contract lasting more than 12 months, Housing Associations must go through dispensation – a process of communicating its intention with its tenants and discussing potential implications whilst also inviting pushbacks from the tenants.

What are the benefits of Section 20 dispensation?

Future transparency

Gas and power markets are tradable up to three-years ahead, and longer contracts ensure greater future price visibility and non-commodity charges breakdowns, therefore making you better equipped for budgeting further down the line.

Increased procurement flexibility

Longer energy contracts via section 20 dispensation also allow for a wider range of procurement options than the limited scope of a fixed 12-month contract under Section 20. Going beyond 12 months opens up improved risk management and hedging options, such as hybrid and flexible procurement contracts.

This wider array of energy procurement options will unlock potential value to Housing Associations and tenants. The added flexibility combined with the help of our expert energy market analysts will enable you to ride the waves of a volatile market to make financial savings.

Support from our team

The other benefit you get from Section 20 dispensation is added support from our intelligent trading and risk management desk. Due to the limitations of a 12-month energy contract, there is less we can help you with, however, lengthier flexible procurement agreements mean our energy market experts can have greater involvement in the process. They are constantly monitoring the market to lock in the best prices for you.

If you are interested in dispensation from the Section 20 Act, we can help you complete and submit the First-Tier Tribunal dispensation application form and draft a notification letter to be submitted to tenants confirming this, with additional information which will help them to understand why you are doing this and offering them the right to support or oppose it.

If you want help with your Section 20 dispensation, give us a call on 020 8835 3535 or drop us an email: savings@wwwtest.monarchpartnership.co.uk