How we reduced costs in FY21/22
RECCo's Director of Finance and Commercial
The audit of RECCo’s financial results for the year ending 31st March 2022 has now been completed and RECCo has once again secured an unqualified audit report. The auditors found the financial statements gave a true and fair view of RECCo’s affairs for the financial year.
You can read our 2022 financial statements on our website here.
RECCo is not-for-profit, meaning that in each financial year our income must match our costs. We consult on our strategy, and the budget necessary to deliver it, ahead of each financial year. The agreed budget is recovered from energy suppliers proportional to their market share.
Where the actual costs incurred for the year are less than expected, we return that excess to Energy Suppliers as a rebate against the next years charges.
We’re delighted to announce that, following the audit of our 2021/22 accounts, we will be returning £4.25m to Energy Suppliers as a rebate against their October 2022 invoices.
In 2021, we witnessed the start of a series of unprecedented energy market changes resulting in energy suppliers going out of business and a rapidly rising wholesale energy price.
RECCo responded quickly to help reduce costs wherever we could. We took the following actions:
Minimised the cost impact of ‘change’ via the detailed service requirements included in our Code Manager contracts.
To reduce the cost of supporting Ofgem’s Switching Programme, we re-negotiated service provider costs, developed a delivery plan which focused resource on critical areas, and recruited in-house expertise.
We applied strong commercial principles to all service providers, holding them commercially and financially accountable in all instances where service levels weren’t achieved, or milestones weren’t reached.
We proportionately charged non-REC Parties for access to REC Services wherever that was allowed under the REC to reduce costs for REC Parties.
In the past year, we implemented enhanced and more dynamic debt collection processes, limiting our exposure to bad debts. In 2021, our bad debts represented c.1% of turnover despite those failed suppliers supplying c.5% of the market.
Our recruitment programme was re-baselined, and we adopted a “critical spend only” policy to our operating costs.
We strengthened our financial control mechanisms by restructuring our projects pipeline, deferring project spend wherever possible.
Finally, we expanded our procurement by competition principle to lower value projects to ensure value for money was achieved wherever possible.
It is these actions, alongside prudent financial management, that means we can provide the £4.25m rebate to REC parties. Going forward, we will continue to adopt and evolve our financial control mechanisms, keeping stakeholders updated on our progress.
