Nottingham City Council has announced new tariff rates for domestic and commercial customers using the city’s district heating and private wire networks, effective from 1st January 2025.
The council says that the updated tariffs are a response to global energy price volatility and the rising costs of maintaining the district heating infrastructure. These changes are expected to have widespread implications for residents and businesses across Nottingham, particularly those in the Dales, Mapperley, and St Ann’s wards.
The decision released today was taken by Nottingham City Council’s Communities, Environment, and Resident Services department and outlines the new tariffs for 2025.
The domestic heat tariff will have a standing charge of £0.57225 per day, with a unit charge of £0.076349 per kWh. Meanwhile, the domestic electricity tariff will see a standing charge of £0.6289 per day, along with a unit rate of £0.2498 per kWh.
The specific rates for commercial customers remain confidential.
Reasons for Tariff Increase
The annual review of tariffs is essential to ensure that the district heating and private wire networks remain financially sustainable. Energy prices for both commercial and domestic customers have historically been determined through a combination of contractual indexation mechanisms and benchmarking against wholesale energy markets. The council also takes into account the operating and maintenance costs of the Combined Heat and Power (CHP) plant, which provides energy to local homes and businesses.
The decision to increase tariffs for 2025 was driven by several factors, including the global volatility of wholesale energy prices and inflationary pressures on steam delivered from the Eastcroft Incinerator. The Retail Price Index (RPI) has played a significant role in the calculation of these tariffs, contributing to the increase in costs that must be passed on to consumers.
The council’s projections show that the new tariffs will generate an additional £500,000 in revenue for the 2025-26 financial year. Of this, £129,000 is attributable to increased tariffs for commercial and domestic customers, while £371,000 is expected to come from electricity exports. However, this revenue will be offset by rising operational and maintenance costs, which are projected to total £250,000.
The council’s district heating and power networks also supply several internal properties, including the Council House, Loxley House, and the Victoria Leisure Centre. For 2025, there is a forecast reduction of £159,000 in heat income from these properties, although an increase of £45,000 in income from electricity supply will somewhat mitigate this loss. Overall, these changes will improve the council’s Medium Term Financial Plan (MTFP) by £250,000 compared to the 2024-25 base budget.
The decision-making process involved consultations with various council bodies, including the Waste Transformation Board, with all recommendations fully supported. The council says it is keen to ensure that the district heating and private wire networks operate on a cost-neutral basis, with revenue covering all associated expenses. This helps to maintain the non-statutory services without impacting other public funds.
The council has acknowledged that several customers who rely on these energy services are already facing financial pressures due to the ongoing cost-of-living crisis. As such, the discretion to vary charges requires careful consideration of all relevant information, including the prevailing economic conditions and government initiatives.
Nottingham City Council says it remains committed to providing a sustainable energy supply through its district heating network, which is partly powered by waste energy from the Eastcroft Incinerator. The district heating system serves thousands of residents, providing a low-carbon alternative to conventional gas heating. However, the council faces ongoing challenges related to maintaining the infrastructure and managing fluctuating energy prices, which directly influence the tariffs charged to customers.
As energy costs continue to rise globally, the council’s approach reflects a careful balance between financial viability and social responsibility. While the increased tariffs will contribute to maintaining essential energy services, Nottingham City Council is also mindful of the need to support residents during challenging economic times.
The new tariffs will take effect from January 2025, with customers advised to review the changes and prepare for the impact on their energy bills. The council has encouraged residents and businesses to contact their energy team for further advice and support regarding these changes.
Nottingham City Council’s district heating scheme remains a cornerstone of its environmental strategy, and the authority will continue to explore ways to improve the efficiency and sustainability of the network in the coming years.
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