The carbon tax may be history, but utilities cost still account for a considerable part of the strata scheme budget, and there are still massive savings to be made.
Did you know we have a sister company Silver Asset Services that saves strata communities millions of dollars every year through bulk utility supply?
Bulk Utility Supply is a relatively new way in which bodies corporate and strata properties can team up to gain bulk buying power that will save money on utility expenses.
It takes advantage of the full buying power of the community, so rather than each individual lot being supplied by the energy provider, the community has one incoming energy supply, which is then distributed to the lots.
By configuring communities for bulk utilities, the usage of the individual occupiers as well as the community supply can be combined to obtain substantial cost savings in electricity, hot water, chilled water and gas. In fact some communities experience savings of up to 40% on their electricity bill, when compared to standard tariff.
For investors in units, savings are seen in lower body corporate levies by having lower common area utilities costs, and thus a better return on investment. The owner/occupier and residents enjoy the advantage of individual unit consumption costs being considerably lower than the standard tariff rates.
The Silver Asset expertise has led to great savings throughout Australia, for instance residents and body corporate of Gold Coast building The Wave save more than half a million dollars per year on their electricity bills when compared to the standard tariff.
While the cost savings associated with on-selling utilities can be attractive, there are many regulatory, administrative and technical obstacles that can be overwhelming for a committee. Consulting the right experts and suppliers is crucial, as a recent case study by SSKB community manager Sarah Mendes demonstrates.
“A building in my portfolio was facing severe cash flow problems due to installed bulk utility infrastructure.
The body corporate had inherited an arrangement, signed by the developer, to have a third party install the utilities infrastructure. The agreement saw the body corporate being charged for all consumption of energy and water on site, without a facility for the body corporate to recover these expenses from the lot owners. This left the body corporate with a very limited cash flow and crippling levy contributions.
As a consequence the body corporate was accumulating an increasing amount of debt and if the issues were not properly addressed they would soon be faced with bankruptcy.
Utility bulk billing can offer great advantages to strata communities, but the legislation and procedures surrounding it are intricate and highly complex. I consulted bulk utility conversion expert David Reid from Silver Asset Services on ways to salvage the situation and together we mapped out a plan that would return the body corporate to financial stability.
For the body corporate to take advantage of the bulk billing utilities process they would first of all need to gain ownership of the bulk utilities infrastructure but the outstanding debt had amassed to a whopping $196.455.
However, we were able to negotiate a payment plan, with the original installation company, in which the body corporate took possession of the utilities infrastructure at the greatly reduced rate of $65.000 saving $130.863.
With the utilities infrastructure in the hands of the body corporate the bulk billing process is now running efficiently allowing the community to make great saving on their utility bills. With Silver Asset Services as the billing administrator, the body corporate is now finally set to capitalise on the savings and reap the benefits of bulk utility billing long into the future.
Achieving these positive results to my communities is the number one reason I love being a community manager at SSKB.”
As illustrated by Sarah’s case, there are great savings to be made from bulk utility conversion, as long as you engage the right suppliers in the process.
Contact us today to see how the SSKB Community Managers can help you overcome problems in your community.
For professional advice on bulk utility conversion please contact the friendly team at Silver Asset Services.