Section 20 Dispensation grants housing associations the authority to engage in energy supply contracts that extend beyond the standard 12-month limit.
Understanding Section 20 Dispensation
Under Section 20 of the Act, housing associations are restricted from entering into contracts exceeding a 12-month duration where the ultimate costs are transferred to tenants, as seen with energy bills.
To enter into an energy supply contract that exceed the 12-month period, housing associations must undergo a dispensation process. This process involves communicating their intent to tenants, discussing potential implications and inviting objections from tenants.
In this context, it’s essential that energy prices remain valid for an entire 56-day consultation period. Given the inherent volatility of energy markets, prices rarely remain valid beyond the same day, let alone 56 days.
Another viable option to obtain dispensation from the consultation requirements is to submit an application to the First-tier Tribunal.
The Benefits of Section 20 Dispensation
While the process of seeking dispensation from Section 20 consultation may seem like routine regulatory exercise, it carries significant advantages for housing associations and their tenants when securing longer-term energy contracts.
Tradable gas and power markets extend up to three years in advance, and committing to extended contracts offers enhanced visibility into future prices and a detailed breakdown of non-commodity charges.
This, in turn, equips housing associations with better tools for effective budgeting in the long run.
Moreover, the act of seeking dispensation from Section 20 consultation opens doors for housing associations to explore extended energy contracts and a broader spectrum of procurement alternatives.
Contracts spanning more than 12 months provide improved risk management and hedging opportunities.
By gaining access to a wider array of energy procurement options, housing associations can unlock additional value, benefiting both themselves and their tenants.
Section 20 Dispensation with EIC
When seeking dispensation from Section 20 Act requirements through EIC, you gain valuable assistance from our proficient trading and risk management desk.
While the scope of support is somewhat restricted within a 12-month energy contract, opting for more extensive flexible procurement agreements enables our energy market experts to play a more substantial role in the entire process.
Our experts carefully monitor the market dynamics to secure the most favourable prices on your behalf.
If the idea of dispensation from the Section 20 Act appeals to you, we can guide you through the completion and submission of the First-tier Tribunal dispensation application form.
Additionally, we’ll assist in crafting a notification letter for tenants. This letter will not only confirm the dispensation but also provide supplementary information, aiding tenants in understanding the reasons behind your decision.
Furthermore, it affords your tenants the opportunity to express support or objection to the dispensation.
Our comprehensive industry expertise have played pivotal roles in contributing to numerous client success stories, including:
See a selection of our most frequently asked questions.
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Yes. Our team will produce notification letters, aiding tenants and giving them the opportunity to express their views. Please call us today to understand the full scope of services.
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