UK Commercial Landlord Solar Energy Resale Rules: Ofgem Maximum Price

Key Takeaways

• Commercial landlords in Great Britain cannot profit from reselling electricity to domestic tenants.
• The Maximum Resale Price (MRP) means tenants pay no more than the landlord's cost, including standing charges.
• Electricity supplied by quantity must be measured by an appropriate, approved, and certified meter.
• While supplying electricity generally requires a licence, exemptions exist for self-generated power or resale of licensed-supplied electricity.

Can a commercial landlord resell solar electricity to tenants for profit in Great Britain?

No, a commercial landlord in Great Britain cannot profit from reselling solar-generated electricity to domestic tenants. Ofgem, the independent energy regulator for Great Britain, sets rules to ensure that electricity cannot be resold for more than what the reseller originally paid, when it is used in people's homes.

What is actually going on: Ofgem's Maximum Resale Price Direction

Ofgem's Maximum Resale Price (MRP) Direction is a regulatory framework designed to protect consumers from being overcharged for electricity by resellers, such as landlords. This direction applies specifically when electricity is resold for use in people's homes. The core principle is that the reseller cannot make a profit on the electricity itself.

The legal basis for this direction comes from the Electricity Act 1989, Section 44, which empowers the Authority (Ofgem) to direct maximum prices for resold electricity. From 1 January 2003, the maximum price at which electricity may be resold is the same price as that paid by the person who is reselling it, including any standing charges. This means that if site owners and landlords supply energy to domestic consumers, they cannot profit from the energy they resell to people who live there.

It is important to note that these rules do not apply if the energy costs are already included in the tenant's rent or pitch fee. However, landlords can charge an extra fee for services such as meter readings and invoicing, on top of the energy costs. For park homes, such additional fees must be explicitly included as an agreement in their written contract.

Consumer rights and metering requirements

Tenants have specific rights when electricity is resold to them by a landlord. These rights ensure transparency and fairness in billing.

For accurate billing, the law requires that where a customer is charged for electricity wholly or partly by reference to the quantity supplied, the supply must be given through, and the quantity ascertained by, an appropriate meter. This meter must be of an approved pattern or construction, installed in an approved manner, and certified. A meter may be certified by a meter examiner or by a person authorised to certify meters under regulations.

The responsibility for providing and maintaining the meter depends on who supplied it:

• If the authorised supplier agrees, the meter may be provided by the customer. In this case, the customer must at all times, at their own expense, keep the meter in proper order for correctly registering the quantity of electricity supplied.
• If the authorised supplier provides the meter, they must at all times, at their own expense, keep it in proper order for correctly registering the quantity of electricity supplied.

The Measuring Instruments Regulations 2016 cover the requirements for measuring instruments, including active electrical energy meters, for use for trade.

What you can check yourself, and what you cannot

As a tenant, you can actively exercise your consumer rights by requesting information about your electricity charges and the landlord's energy supply contract. You can also monitor your own meter readings if you have access to your meter.

As a landlord, you must ensure compliance with Ofgem's MRP direction and metering requirements. This includes ensuring that any electricity resold to domestic tenants is priced at no more than your cost and that appropriate, certified meters are in place. You should also be prepared to provide tenants with the information they are entitled to.

However, you cannot resolve legal disputes with tenants regarding the MRP yourself if an agreement cannot be reached. Ofgem cannot help with individual maximum resale price direction disputes. If a dispute cannot be resolved with the site owner or landlord, you can take it to be resolved by the civil courts. Similarly, determining if your solar electricity supply arrangement qualifies for a licensing exemption under the Electricity Act 1989 may require professional legal advice, as the specific conditions can be complex.

What the published sources do not tell you

While published statutory guidance and Ofgem rules offer a clear framework for the Maximum Resale Price and general metering requirements, several aspects relevant to commercial landlords with solar installations are not explicitly detailed:

• Green Lease Clauses: Specific guidance or legal provisions regarding "green lease clauses" in the context of solar energy resale by landlords were not found.
• Solar-Specific Service Charges: Detailed information on "service charges" specifically related to solar energy infrastructure or resale, beyond general mention of "extra fees for things like meter readings and invoicing," was not found.
• Automated Interval Billing: Specific regulations or established practices for "automated interval billing" for solar energy resale by landlords were not explicitly detailed. While metering is covered, the automation aspect of billing is not.
• "Landlord Solar" Definition: published statutory guidance and Ofgem rules do not explicitly define or discuss "landlord solar" as a distinct legal or regulatory category, but rather address the general resale of electricity by landlords.
• Passing on SEG Benefits: The sources do not contain information on the specific mechanisms or requirements for landlords to pass on benefits from solar generation (e.g., Smart Export Guarantee payments) to tenants under the MRP.
• Detailed Exemption Conditions: While the Electricity Act 1989 and related Statutory Instruments provide for exemptions from licensing, the specific conditions under which a commercial landlord operating a solar array would qualify for such an exemption for direct supply to tenants are not fully elaborated in the provided excerpts.
• Practical Enforcement: The sources do not contain information on the practical implementation or enforcement of the MRP in complex commercial landlord-tenant solar arrangements, beyond the general statement that disputes can go to civil courts.