Factored Energy Arrangements: Pricing

Jim Shannon Excerpts

Wednesday 14th January 2026 Westminster Hall

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

I beg to move,

That this House has considered energy pricing for consumers with factored energy arrangements.

It is a pleasure to serve under your chairmanship, Mr Stuart. I am pleased to have secured this debate on a systemic regulatory failure that is quietly draining the bank accounts of residents across Scotland and the wider UK. We are in the midst of a cost of living crisis, yet large numbers of domestic residents are being charged inflated business electricity tariffs for the essential communal services that keep their buildings safe and functional.

In a nutshell, the issue is that in many residential developments, services such as stairwell lighting, fire alarms, lifts and door entry systems are powered via shared electricity meters. Despite that electricity being used entirely for domestic living, residents are routinely charged business energy rates. It is not a niche issue; it is a systemic failure driven by outdated rules and weak enforcement.

The financial harm to our constituents is stark. A typical communal supply, using around 1,000 kWh per year, would cost roughly £380 on a fixed domestic tariff. Under the frequently used standard variable business tariffs, that same usage can rise to around £1,465, an excess cost of approximately £1,100 per meter every year. Across a modest development of 75 flats, it can add around £12,000 annually to residents’ collective bills.

What makes that particularly galling is that many residents are entirely unaware of how their communal electricity is billed. They may not know whether it is on a separate meter, how many accounts are involved, or whether it is charged at domestic or business rates. The costs are simply absorbed into factoring charges, leaving consumers unaware of both the issue and their rights—unaware when they are being roundly fleeced for someone else’s failure to either act properly or correctly inform them. The root cause of the issue is simple: it is a regulatory mismatch. The problem sits at the intersection of Ofgem regulation, supplier interpretation and third party management structures.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing forward this debate. He and I spoke beforehand, but he might not be aware that consumers with factored arrangements in Northern Ireland were historically vulnerable to high, unregulated prices, similar to consumers in GB, but the Northern Ireland Assembly moved to correct that vulnerability. Does he agree that, UK-wide, those in communal schemes must have protection from gouging and be able to access better priced energy?

[Graham Leadbitter]

That is absolutely the case. To take Scotland as an example, consumers have a route to address complaints about this issue through the regulation of factors, but it is complex and cumbersome. There should be a simpler way to do it through the energy regulator, as I will touch on later in my speech.

Many communal meters are correctly classed as profile class 01, a domestic designation based on usage. However, where a property factor, managing agent or company holds the contract, suppliers often automatically apply the business tariff.