Schools have been warned to watch out for a “hidden” energy cost that has doubled so far this term and is not covered by the government’s support scheme.
The costs - from the “non-commodity” part of electricity bills - shot up in the two months from August, according to data seen by Tes.
Schools are at risk of being caught out with “misleading offers”, a multi-academy trust leader has warned.
School energy bills are typically made up of two elements: the “commodity” part, covering the raw energy unit costs, and the “non-commodity” portion, which pays for administration.
The “non-commodity” costs are not covered by the government’s relief scheme, which began last month and provides non-domestic customers - including schools - with a discount on their gas and electricity unit prices.
But in recent months, non-commodity costs have made up over a third of typical electricity bills, and a much smaller amount for gas bills, although this varies significantly from bill to bill.
The non-commodity price of a typical electricity deal rose from around 12-14p/kWh up to 25-30p/kWh in the two months from August, according to data from energy procurement firm Zenergi.
Chris Jermy, head of education business development at Zernegi, said the rising non-commodity costs are a “key factor in why those fixing contracts in August onwards are not getting such a significant decrease in costs from their overall unit rate”.
Schools vulnerable to ‘misleading’ energy offers
Rob McDonagh, chief executive officer of the East Midlands Education Trust, said the fact that non-commodity costs were uncapped by the government scheme meant that increases could be “slightly hidden”.
“Schools need to be careful when looking at bills and quotes, that they understand which elements are commodity and which are non-commodity, and how different elements of the bill can change over time”, he said.
Standalone schools were particularly vulnerable to “misleading offers”, he added, because they “may not have the procurement expertise that larger MATs typically have”.
He said that some energy suppliers “like to showcase lower commodity costs while not pointing out higher pass-through non-commodity charges, which can rise during the term of the contract”.
Mr Jermy said that sometimes, contracts fix commodity costs - meaning these do not rise throughout the length of the contract - but do not fix the non-commodity element, which can make the deal “look more attractive than it is”.
But he also added that the trend in non-commodity costs increasing appeared to be reversing in recent weeks.
Hayley Dunn, business leadership specialist at the Association of School and College Leaders, said that non-commodity prices were a reason for the “significant” increases in schools’ energy costs.
“Our advice for schools renewing deals is to carefully consider the length of contract they want to enter into,” Ms Dunn said. “In the current market, shorter-term may be better. Schools requiring further guidance should contact the DfE’s ”Get help buying for schools” service.
“Schools are already under immense pressure and support has only been guaranteed until the end of March, making it impossible to budget accurately. Continued support is needed to ensure education budgets can be spent on delivering education.”
The Department for Business, Energy and Industrial Strategy sent general guidance on the scheme but did not respond directly to a question about why the non-commodity element of bills was not protected.
