The Competition and Markets Authority (CMA) has released a report calling for the UK’s heat networks to be regulated.
There has been concerns that heat network customers have not been getting the same level of consumer protections as gas and electricity consumers
The report came after a study into the 14,000 UK heat networks and aimed to establish whether customers were getting a good deal.
The CMA found three main areas of concern: Design and build – property developers who cut costs of installing a network can pass the extra costs onto customers because of higher operating costs.
The CMA also found some networks are installed to meet planning requirements instead of being the best fit for customers.
Monopoly of supply – often customers have no alternative sources of heat so can get trapped in long-term contracts. Low transparency – before someone moves into a new property, often they don’t know that their energy will be supplied by a heat network. Then once they’re living there, their bills aren’t transparent.
The CMA had said its provisional view is that the sector should be regulated to address these three issues. CMA senior director Rachel Merelie, said: ‘Heat networks can play an important role in cutting carbon emissions and keeping down energy bills, but some customers are not getting a good deal for this essential service. ‘Our current view is that regulation is now needed, to ensure that heat network customers receive equivalent levels of protection to gas and electricity customers.’
The CMA has proposed better regulation of the heat network sector would include: better protections for heat network customers, including access to an ombudsman and support for vulnerable customers steps to improve how networks are designed and built mandatory rules and criteria about price and quality in long-term contracts improved transparency by providing better information on networks, heat supply agreements and clearer, more detailed bills
Community and district heating specialist Switch2 Energy has welcomed the proposals, which tally with with earlier recommendations for a new regulatory framework from the Heat Network Task force, which is supported by Switch2.
In its Shared Warmth report, the industry task force, led by the Association for Decentralised Energy (ADE), set out how better regulation could reduce investment risk and raise performance standards.
Switch2 Energy’s Ian Allan, who is a member of the Heat Network Task Force, said: “The anticipated expansion of the heat network sector means that the voluntary codes of practice and customer service standards that Switch2 helped to develop, need to be reinforced to ensure consistent best practice across the entire industry.
“Regulating the sector will drive higher performance standards. This will increase resident satisfaction and protection, while encouraging further investment in the sector.
“Community and district heating schemes have an important role to pay in decarbonising the UK heat supply. With mandatory regulation we can ensure that all heat networks can deliver on their full potential to provide affordable, green and reliable heat to residents.”
The CMA is consulting on its heat network recommendations until 31 May 2018 and is expected to publish its conclusions this summer.