Rendall and Rittner – the failure of ‘bulk tendering’ of Electricity supply and 40%+ service charge increases
Summary
It appears that Rendall and Rittner’s electrical supply tendering strategy has failed. Rendall and Rittner have tried to tender for electricity supply on a huge bulk scale at a time when energy companies were risk averse /energy prices were very volatile and thus there was almost no response to the tender. This has left us at the mercy of EDF (existing supplier) and a new contract was signed with them at a 333% increase to 71.51p per KW/H (compared to market rate of around 35p per KW/H in May 2023). Had Rendall and Rittner negotiated for Chelsea Bridge Wharf on single development basis (and given that our freeholder has no credit rating issues) it is likely we could have got a much better deal. Rendall and Rittner could also have taken a 6 month deal in October 2022, so that we could now (May 2023) be in a position to enter into a new contract the current average price (i.e. around 35p per KW/H compared to 71.51 per KW/H). We are paying twice as much as we might have, had better decisions been made.
I am not convinced that Rendall and Rittner have behaved reasonably in this matter and I will be paying service charge under protest until further notice while I investigate further and obtain advice.
In the meanwhile I suggest a plan for the urgent reduction of electricity consumption in communal and external areas should be drawn up, in consultation with residents, and the fountains should be a central part of that.
Detail
Warwick Building service charges were increased by up to 49% (block 1-3) from April 2023 and it is likely other blocks will see similar increases since over 80% of the increase was apparently attributable to electricity price increases. However, initial conversations with Rendall and Rittner raise many questions about how re-tendering of the electricity supply was carried out , and in particular whether bulk retendering (i.e. tendering out the landlord supply for ALL Rendall and Rittner managed developments in one tender) was a sensible or competent approach given the market conditions (high price volatility / uncertainty). This process is ‘explained’ in a letter from Rendall and Rittner dated 28.3.23 .
It appears that Rendall and Rittner did not attempt to retender the contract for CBW electricity or any individual block meter but just for their whole portfolio (landlord electricity supply across all Rendall and Rittner developments where Rendall and Rittner have responsibility for commissioning electricity supply).
Rendall and Rittner refer to ‘leveraging our size and relationships to get preferential contract terms and competitive pricing. Bulk procurement in this regard enables credit objections associated with dormant management companies and not-for-profit status to be mitigated.’ and Rendall and Rittner refer to ”credit ratings being an issue in suppliers’ willingness to supply and that ‘this is particularly a problem for the managing agent sector where contracts are created in the name of the client legal entity”’
But the ‘client legal entity’ in the case of Warwick building is either Berkeley Homes or London & Quadrant? Are Rendall and Rittner saying either of these are considered as having a poor credit rating or are in some way a risk for suppliers? It seems unlikely that that is the case either for Warwick or any other building’s freeholder at Chelsea Bridge Wharf .
Clearly bulk tendering (or attempting it) has not benefited CBW residents. It is unlikely that our freeholder comes under the category of organisation with poor or problematic credit rating, so we did not need to be lumped in with the other developments to hide or improve our credit rating. Attempting to tender for ALL Rendall and Rittner electricity supply rather than by development has clearly put Chelsea Bridge Wharf at a disadvantage as no supplier wanted to take on such an enormous contract which would have included high and low risk developments, and in such large numbers that it would be impossible for them to make a meaningful risk assessment, without investing hundreds of hours to check the credit rating of all the Rendall and Rittner clients (Freeholders or right to manage companies) at various developments.
Rendall and Rittner state that ‘Whilst the markets reopened in April, pricing remained 23% higher than the pre-invasion market, and so the decision was made to continue to monitor for a downward trend.’ So it seems Rendall and Rittner could have got a new deal at approximately a 23% increase but ended up getting a deal at a 333% increase in the case of Warwick (staying with EDF).
So, far from achieving bulk purchasing power this ‘bulk tender approach’ has scared off potential suppliers and left us at the mercy of EDF who have taken full advantage with a 333% increase. It seems this was a mistaken strategy to try to tender in bulk for all Rendall and Rittner developments when the market conditions were so volatile and uncertain.
Neither Rendall and Rittner nor CBWRA have an emergency plan to drastically reduce electricity consumption at CBW. An obvious place to start would be reducing hours of operation for fountain pumps or stopping altogether (notwithstanding that they are out of action much of the time anyway). This is something we simply cannot afford at current electricity prices and I am sure residents would support the cessation of the fountains for a period of time, or the minimum ‘on time’ which is feasible.
Many residents support filling in the fountains in fact (or at least carrying out a feasibility study to do so as shown in the Annual Residents Survey 2021). Unfortunately CBWRA have refused to act on these findings (that a feasibility study should be carried out with options of filling in the rectangular fountains). A vote on this was promised by the former Chair (Mr Thompson) at the AGM in May 2022 – I said at the AGM in May 2022 (full meeting transcript available on request) that we would not hear more about this vote after the meeting closed, and indeed a year later we are still waiting. Had this been done 2 years ago we would have saved a small fortune on relining, maintenance and electricity. It is even more urgent to take action now and should not be delayed further.
I am aware of some initiatives which Rendall and Rittner are taking regarding monitoring electricity consumption and some which may reduce consumption (automated meter readings, LED upgrades) but this is perhaps pretty marginal stuff. It does not seem there has been any investigation regarding the use of renewables at CBW (e.g. solar panels) even though this technology has become ever cheaper, modular and easy to install. The cost benefit analysis on this must surely now be in favour of solar panels, given the current and projected electricity prices. The Annual residents survey (summer 2021) showed strong support for investigating renewables such solar panels but again no action has been taken on this as far as I am aware.
According to their letter, Rendall and Rittner commission on electricity is
‘0.3p/kWh (£0.003/kWh)’
How much is this in cash terms for the year, at Chelsea Bridge wharf, based on average yearly consumption? LKP have estimated an annual revenue to Rendall and Rittner of circa £1 million across all developments from the electricity commission. Rendall and Rittner have denied this but have not said what the actual figure is.
As stated in summary, I do not believe that Rendall and Rittner have behaved reasonably in this matter and I will be paying the service charge under protest until further notice while I investigate further and obtain advice.
In the meanwhile I suggest a plan for the urgent reduction of electricity consumption in communal and external areas should be drawn up, in consultation with residents, and the fountains should be a central part of that.
Unbelievable incompetence thanks for the update.
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The difference between what could have been and what it is, is staggering.
Surely there needs to be accountability for this.
That between the suppliers and our management companies , is there any concern for we the consumers and the burden of increasing service charges.
It behoves of the powers that be – R&R in this case to resolve this in our favour ASAP.
Geeta Subramanian
Eustace
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There is very little concern for residents I’m afraid – they do what they can get away with and as long as the residents’ association refuse to hold them to account they will continue to do it
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They have us off in Liverpool at least dick Turpin wore a mask
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Hi William – do you know what you are paying for electricity at your development ? i.e p/per kwh?
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🙂 ! Yes these guys would charge us for the mask and vet’s bills for the horse..+ commission
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We are requisitioning an EGM to change the Board and terminate R & R. Please contact me at paulsimms2@aol.com.
Harrods Village. Barnes.
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Thanks Paul – hope you manage to get rid. Will be in touch would be interested to hear more. As R and R have tendered for all developments (and failed) in a bulk tender there is perhaps the possibility for a cross development challenge at tribunal, on the grounds that this was not a reasonable way to proceed
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They are over charging us . They have destroyed our investment and also the services they are giving has nothing to compare with this high service charge .
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Sadly this is the case and the former chair of our so called residents’ association has wasted two years when we could have got Right to Manage by now. Two years of nonsense, telling us that RTM was not possible. that we cannot audit Rendall and Rittner, that we we have to have a ‘collegiate relationship’ with them. Time and money wasted. The dysfunctional culture continues in CBWRA – no consultation with residents, supressing criticism, dodgy election for Chair (and that’s being polite). Still at least we do not have Thompson in charge any more which is great and means there is some potential for positive change
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We are trying to establish a Resident Association this week and negotiate with Berkeley and R&R. If we don’t receive a response, we are ready to remove them as we have already reached 80% of residents. This would be very damaging to their reputation. My service charge was £22,000 last year and has now increased to £29,000, which is unacceptable. These people have no shame and are only thinking about their profits. I hope we can remove them soon if they don’t lower the service charge. We have some budget suggestions for them too. We don’t need to pay so much to staff and have many managers who do nothing and still get paid. Our windows are always dirty, and we are paying double from last year for window cleaning. We have a wind turbine in our building to reduce the cost of energy, but they never use it. What can I call this management? I’m speechless.
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22k? For one property? Yes definitely you need to get a resident Association together and then get it recognized and trying to move forward on right to manage which needs 50% of leaseholders signed up. I would suggest that you also consider hiring someone to go through the service charge accounts for the last few years and find out where the anomalies are
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Disgrace
Been charged £1000 a month for 20 year old heaters in winter that an engineer said “didn’t work properly” and “gave off little to no heat”
I would of never moved in if these rates were explained
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Really sorry to hear that. £1,000 a month?? Madness. sounds like you may have a basis for a tribunal action..?
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We live at Hatton Garden, Liverpool, where the energy company they use there has just increased the electricity price to 84 pence per unit, then backdated that new price right back to October. They also didn’t tell anyone they were doing this, the first people knew was when they received bills for almost a thousand pounds with the new unit price on them.
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Horrendous behaviour. Do you know if they obtained quotes for your block / development or just lumped you into bulk tender?
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Hi Michael, we’ve never had any communication from R&R about the energy costs or been provided with any quotes so it’s very likely they just lumped us into a bulk tender.
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I think that is very likely. I will message you privately about this next week . All the best
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I believe the electricity ‘deal’ will have been the same as the Berkeley Homes development in Kidbrooke. Berkeley negotiated directly and did not go through the R&R brokerage. Billing being through EDF who operate the meters and billing and obtain the government subsidy against the inflated rataes. The energy is purchased through a trading account setup with Redmayne Bentley with Half Hour settlement meters. So what did Berkeley really pay for the electric?
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Hi Pete thanks for your message. Actually rendall and rittner insist that cbw electricity contract was through the bulk tendering. Apart from one block Warwick building where the freeholder is London and quadrant housing association. London and quadrant negotiated their own electricity deal for the block which was actually a reasonable deal. It would appear that our residents association CBWRA are trying to claim credit for this deal but in fact they didn’t have anything to do with it as far as I’m aware. /p>
I have done quite a bit of research around this and looking at prices at other developments so if it’s okay I’ll contact you privately it would be interesting to compare notes
Rendall and rittner claim that they did tender for all of their Berkeley homes managed properties but that there was no difference surprise.
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Michael contact me directly and I will share some more emails and information with you.
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