New protections are set to be put in place which will protect 500,000 energy customers from skyrocketing bills and poor customer service.
In a response to a consultation published this week, the Government proposed that energy customers on heat networks will get fairer pricing regimes, more transparent and simplified billing, enhanced support for vulnerable customers, and compensation payouts for lost access to heating.
Heating networks - sometimes called "district" or "communal' heating" - are used to heat blocks of flats or groups of homes. The supplier is usually the landlord or freeholder, which buys energy on the commercial market for residents. Households on heating networks are currently excluded from the protections from Ofgem's price cap and even though they are domestic customers, they do not get the same protections.
This has meant during the energy crisis when wholesale costs skyrocketed, heat network customers often faced the brunt of it with the heightened expenses being passed on. The package of measures aims to give customers similar rights to those using traditional gas and electricity connections. The proposals are expected to be put into legislation by 2025 and once enacted the regulations will be overseen by Ofgem, with the Energy Ombudsman and consumer advocacy organisations offering support.
Lord Callanan, Minister for Energy Efficiency and Green Finance, said: "Heat networks are expected to support millions of households in the years ahead, as families look to cleaner ways to heat their homes. That is why it is vital we ensure customers connected to these heating systems enjoy the same protections as other households in our energy market. Today’s announcement will help deliver fairer prices, compensation and more transparent bills, ensuring more families can enjoy the benefits of heat networks."
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Cathryn Scott, director for enforcement and emerging issues with Ofgem, said the commitments to introduce legislation around heat network users would serve as an important milestone to expand the use of the technologies. She said: “We are working with Government to design and deliver a regulatory regime that will be able to deliver improvements for heat network customers. The framework will include consumer protections in the areas of vulnerability, billing and pricing and a route for escalating matters to the ombudsman.”
Further consultations are now expected to be undertaken throughout the rest of the year to outline more details on how regulations would apply, according to the Heat Trust. It said: “It is anticipated that the new regulations will be in place from winter 2025-26, with a year’s initial period for landlords to register their systems with Ofgem and meet the new standards.”
Heat Trust director Stephen Knight said that district heating systems were expected to play a vital role in decarbonising the UK if effectively operated. However, as customers have faced an "unreliable" service with significantly high prices and poor customer service many have turned away from the idea.
Stephen said: “The experience of customers facing huge, uncapped, price rises during the energy crisis of the past few years has been especially difficult. Given that heat network customers cannot switch supplier, it is vital that regulations deliver tangible improvements in terms of price protection, reliability and service quality. There is still much work to be done to deliver regulations and if they are to take effect in 2025, then Government needs to provide further clarity on all intended rules - and the planned timescales and milestones for implementing them - as soon as possible."
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