As the filling station is community owned and operated, we are keen to be open and transparent about how our pricing policy for fuel and charging works. The station is not run on a for-profit basis, but it does have to cover all operating costs and build up a reserve against future costs such as eventual replacement of pumping equipment, large repairs, etc. Any surplus that remains at end of year is donated to the main Trust charity, to be used for our community asset resilience fund or for any other charitable projects we understake for the good of Tiree’s community – no personal profits are involved.
The policy is agreed by the board of Tiree Community Enterprise Ltd, our trading subsidiary that operates the station. The most recent update to the policy was agreed by them on Dec 7th 2023 following a review of cashflow projections for 2024.
The policy will be reviewed on a periodic basis to account for cost changes, etc, and we will always seek to find ways of bringing costs down, and pass such savings on to the consumer.
Current Fuel price policy:
Diesel and Petrol prices will be based on a simple pence-per-litre mark-up against the cost to purchase the fuel and have it delivered to the station. The price at the pump also has to take account of the VAT we are required to charge (currently 20%), and is also reduced by 5p/ltr due to the Rural Fuel Duty Relief scheme. As of the updated policy agreed in December 2023, there will be a differing markup rate applied between two parts of the year – “peak season” and “off-season”. The peak season period has been defined as 1st May through to 31st August inclusive.
After deducting the Duty Relief, the mark-up is 14p/ltr on the pre-VAT price we buy the fuel during the “off-season”
After deducting the Duty Relief, the mark-up is 18p/ltr on the pre-VAT price we buy the fuel during the “peak-season” of May through August
Our prices are obviously higher than most mainland providers, but that is what the current operating model of the station requires to be financially viable given our island location, volume of sales that occur in Tiree, the cost of bringing fuel over from the mainland on the ferry by tanker, the station requiring its own dedicated power supply, water supply, internet connection and staffing cover, etc. Some staffing costs are factored in but are minimal – making up just £6k per year in 2024 – a little over 1% of the turnover of the station.
Why the differing pricing over summer?: When we reviewed the price, it was to ensure that the station covers all operating costs and generates a small surplus which can be set aside for future maintenance and equipment replacement costs over time. We sell 49% of our annual volume between the four months of May and August due to much higher sales levels at that time of year. Putting the price up more for the peak four months allowed us to set a lower price for the other eight months – when local people are more likely to be paying higher costs on electricity and other costs of living. This policy was designed to minimise the cost impact for local residents, for whom the community filling station was mainly built to serve.
When price changes are applied: Pricing updates resulting from changes in supply costs of fuel will be applied directly on the basis of fuel deliveries to the station. Three days after a delivery is received (or the next day the station is open thereafter) the price of fuels will be adjusted to match the latest delivery price, plus the mark-up. The 3 day delay is to allow for consistency, as it can sometimes take a day or two to get the invoice, and this also allows for staff absence, etc.
Stocking policy: We will always be aiming to keep the tank levels as high as is practical. As soon as there is room for a full tanker delivery, we order one. Because more diesel is used, we will often take a smaller delivery of diesel only, so that price is likely to change more often. We will not be varying our purchasing timing on the basis of prevailing prices – resilience of island stocks is the priority.
EV Charger policy:
The Rapid EV charger at the station will operate at a price that is based directly on a 5% mark-up on the unit price we pay for electricity plus the payment processing fee (10%), and is also currently subject to 20% VAT under UK tax rules. Note – the price is based on the electricity used to perform the charging, not what ends up in your battery as usable charge – there are varying losses involved depending on what charging method you use, your vehicle on-board charger, battery levels and temperature.
Water and air tower:
We took the decision in 2023 to operate the water and air tower on the forecourt without customer charge. Maintenance costs for the unit and the cost of the station water supply are met from fuel sales.
