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Step closer to protecting over 500,000 heat network customers

More than half a million customers could get access to compensation and fairer energy bills under new regulations to improve their consumer rights.

Lord Callanan, Minister for Energy Efficiency and Green Finance

Ministers have today taken the latest step to introduce much needed regulation to the heat network market, publishing the government’s response to a consultation on consumer protections for homes and businesses connected to heat networks.

Heat networks are a way of heating multiple buildings from a central source. They can save costs and use green energy. Customers on heat networks registered with the Heat Trust can currently receive support when taking up issues with suppliers – today’s consultation response brings us a huge step closer to boosting these protections to keep pace with a growing market.

Under new regulations to be introduced from next year, families and businesses connected to a heat network would receive greater protection such as compensation if they lose access to heating, fairer pricing, and clearer and easier to understand billing. This will give customers similar consumer rights to those living on traditional gas and electricity connections. Increased protections for vulnerable customers – such as the elderly or those living with health conditions – will also be introduced.

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.” 

More than 500,000 households and businesses are connected to heat networks across Great Britain.

The proposals received strong support from industry bodies, consumer groups, and heat network customers that responded to the consultation in August 2023.

Once the new rules come into effect they will be regulated by Ofgem, who will be authorised to step in when needed, where homes and businesses have problems with disproportionate pricing, poor customer service and poor reliability.

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

The government is also currently updating heat networks through the £32 million Heat Network Efficiency Scheme, enabling network operators to replace inefficient or old equipment to offer a more reliable service and improved heating.

Projects to have received funding as part of the Heat Network Efficiency Scheme include:

Newport City Homes Housing Association Limited, which has been awarded £3.7 million to upgrade the Duffryn District Heating System, improving the performance of the network for more than 970 homes, a local school, and businesses.

Bristol Heat Networks Limited, which received £746,582 for the Redcliffe Heat Network, with 740 residents benefitting from improvements.

Cathryn Scott, Ofgem Director for Enforcement and Emerging Issues said: “Today’s publication is an important milestone in the journey to regulating this growing market and protecting consumers.

“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.”

Stephen Knight, Director of Heat Trust, said: “As the national consumer champion for heat networks, Heat Trust has long campaigned for the regulation of the sector and we therefore welcome this important milestone. These new regulations must achieve tangible improvements in customer experiences in terms of pricing, reliability and customer service if consumers are to gain confidence in district and communal heating systems.”

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.”

It has also been announced that a further 10 projects will receive over £5 million in government support creating new tools and technologies to support the roll out of heat pumps through the Heat Pump Ready Programme.

The initiative supports the development of innovative solutions across the heat pump sector to support the aim of installing 600,000 heat pumps a year by 2028.

2 May 2024

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