Utility firms must switch on to developers’ needs

While the fundamentals must still be very carefully considered, there is one risk that every development is exposed to and that is difficult to quantify and control - the provision of utilities.

Each development will require the input of a utility company to undertake the infrastructure works required to install the new gas, water pipework or electrical cabling from the nearest mains supply to the new development. Very often, one will require a number of individual supplies to each and every occupier.

While open and reasonable competition exists in the provision of the actual supply, the fundamental problem for the developer is that the infrastructure works themselves are controlled by individual utility companies that, for some extraordinary reason in an era of supposedly open market forces, have been able to carve up the country between themselves with little or no competition whatsoever.

This infuriating process starts with identifying the relevant company, sending it a cheque for the privilege of receiving, in due course, a quote for the provision of your new required supply. When you finally receive your quote, there is nothing you can do to challenge the figure.

In the case of new electricity, the quote often results in the notification that the existing supply will not be sufficient to meet your requirements and that it will be necessary to pay for a new substation at considerable additional cost.

Frustratingly, it is very difficult to obtain justification for such costs and it would not be unreasonable to conclude that developers are funding the capital expenditure of the utility companies.

The quote must then be accepted and monies paid in advance of the commencement of works. Once again, there is no flexibility or collaboration on the timing of the works.

The next problem lies in getting the companies on site to carry out the works. While the quote contains an undertaking to come to site subject to a period of notice, such commitments are rarely fully honoured.

As an example, on one of our recent developments, the electricity supply was so late that the contractual handover we had agreed to with our retailers, was under threat. Fortunately, we were able to organise temporary supplies to enable them to start trading.

I do not know of any developer who does not have a story to tell. I also could be talking about telecoms companies and their own very similar attitude towards developers who, God forbid, might ask them to agree to crucial roof repair works while maintaining the mobile phone mast on said roof.

Telecommunications are protected via the Telecommunications Act, which overrules existing leasing arrangements between landlord and tenant.

The current system favours utility companies, whether telecommunications, gas, electricity or water. This results in additional costs for the developer as well as delays and the potential to seriously affect development.

The next government needs to do something about this.

François Nairac is development director at NewRiver Retail