Government sets out new heat network regulations in consultation response

New regulations on consumer protections for homes served by heat networks will provide fairer pricing, clearer billing, and boost compensation where customers lose access to heating, a Government consultation response has promised.

Heat networks distribute heat or cooling from a central source or sources and deliver it to a variety of different customers, such as public buildings, shops, offices, hospitals, universities and homes. 

Figures from May 2023 suggested that around half of heat network customers in the UK are living in social housing, including council housing.

The Government launched a consultation in August 2023, asking for views on its proposals for consumer protection reforms. 

On Tuesday (30 April), the Government published its response to the consultation responses and outlined its proposed reforms.

It said the changes would include compensation for occupants connected to a heat network if they lose access to heating, fairer pricing, and clearer and easier-to-understand billing. 

Increased protections for vulnerable customers – such as the elderly or those living with health conditions – will also be introduced. 

The new rules will be regulated by Ofgem, which will be authorised to step in when needed when homes and businesses have problems with disproportionate pricing, poor customer service, and poor reliability.   

The Energy Ombudsman will meanwhile support consumers with complaints they have with their heat network operator, and Citizens Advice will be the statutory advocacy organisation providing advice and support for consumers on heat networks, the Government said.

In a submission to the Summer 2023 consultation, the Local Government Association (LGA) said it supported increased consumer protections but warned that the proposals could put financial pressure on councils. 

It said the reforms represented a "significant shift in the way heat networks are operated" and would create additional financial and administrative burdens for local authority housing providers who run heat networks. 

It added that it was "critical" that the regulations complement how councils already evidences consumer protection and not create additional administrative burdens.

Cathryn Scott, Ofgem Director for Enforcement and Emerging Issue, 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."

Gillian Cooper, Director of Energy at Citizens Advice, said: "This is another important step forward towards the introduction of much-needed new protections for heat network consumers. 

"It's vital those who rely on a heat network for heat and hot water receive the same level of protection as those on mains gas. And, crucially, those on a heat network must receive the same level of protection irrespective of the size or type of the network they are on - particularly as they can't opt out or switch to a new tariff."

The Government anticipates that legislation will begin to be enacted this year.

Adam Carey