Ealing Homes recover over £800,000 of incorrect VAT and Climate Change Levy charges

TEAM Bureau's routine bill validation activity in combination with a site visit by a TEAM Energy Consultant identified that Ealing Homes was being charged 17.5% VAT on their electricity and gas, instead of 5%. As a result, Climate Change Levy was being charged to their accounts by mistake.

Overpayments during the last 3 years can be claimed back, which equates to cost recoveries in excess of £580,000 for VAT and over £245,000 for Climate Change Levy.

"TEAM have been very pro-active in taking this forward and we are extremely pleased with their work. Even though we do reclaim our VAT, this has huge cash flow implications as regular outgoings are massively reduced", explains Ealing Homes' M&E Maintenance Manager Peter Gray.

Background

Ealing Homes is an Arms Length Management Organisation (ALMO), which manages the residential housing stock on behalf of the London Borough of Ealing. The stock is made up of around 7,500 individual properties and approximately 4,000 communal and district properties that are served by shared utilities such as district heating and communal lighting.

It is essential for Ealing Homes and London Borough of Ealing to demonstrate the effective management of the utility consumption to comply with their legal obligations. Legal requirements include the Home Energy Conservation Act 1995 as well as Building Regulations including Part L, Part L1 and Part L2B. Their Business Plan details a firm commitment to energy efficiency.

TEAM Bureau

Ealing Homes started using TEAM's utility bill validation and cost recovery service delivered by TEAM Bureau in November 2007, through a pretendered Buying Solutions framework agreement. Ealing Homes' contract covers the social housing stock, including residential tower blocks, estates withcommunal district heating and sheltered housing totalling an annual energy spent in excess of £2 million. On behalf of Ealing Homes, TEAM process an annual total of 5,500 invoices for 773 sites and over 1,000 accounts including electricity, gas and water. TEAM provides the following services to Ealing Homes:

Bill Processing

Since commencing the contract TEAM has assisted Ealing Homes to move towards electronic billing (EDI) and now approximately 90% of invoices arrive electronically via electronic data interchange (EDI). This allows bills to be turned around quicker and also reduces the risk of bills going missing. The remaining 10% are entered manually by the TEAM bureau.

Bill Validation

All bills are checked and overcharges are recovered from the utility supplier where appropriate. Ealing Homes is informed which bills need to be paid and which are in dispute.

Accounts Link

On a weekly basis TEAM sends invoice batch files to Ealing Homes via the TEAM Accounts Link software installed at Ealing. The batch files provide total bill amounts which need to be paid. This considerably reduces the workload involved in paying invoices as information is directly imported into the accounts software and payments can be made easily for a complete batch of invoices from one supplier.

League tables

League tables produced by the bureau provide Ealing Homes with a comparison of energy consumption of similar buildings or estates. This helps them to prioritise actions on buildings with excessive consumption to reduce their energy consumption by either adjusting controls and settings or investing in other energy saving measures or technology. The league tables help to focus actions on areas where the highest potential savings can be achieved.

Prior to using this TEAM service, utility bills were paid but not rigorously checked or challenged. In March 2007 Peter Gray identified that the responsibility for the utility budget should lie with the Mechanical & Electrical Team at Ealing Homes, who through a TREND remote Building Management System control both the temperature and time settings, which have a significant impact on the energy consumption at the properties they manage.

Peter identified that the best solution for them was to outsource their utility bill management. "One of the main advantages is for us that we don't have to carry out the tasks in-house as this would mean having to recruit, train and manage additional staff to ensure continuous and reliable bill processing."

Future Plans

Peter Gray is also considering using TEAM Flexible Energy Management Service. The service allows organisations to contract the services of a fully qualified Energy Manager, who is employed by TEAM, without the costs and overheads associated with employing a member of staff full-time.

Peter Gray explains, "I think we can really benefit from utilising external skills and experience to help us with our Energy Policy, strategy and action plan to reduce our energy consumption”.