You are viewing 1 of your 1 free articles
Energy regulator seeks views ahead of heat network regulation
Views are being sought on plans for heat networks in the UK to be regulated by Ofgem for the first time.
A joint consultation published by Ofgem, the UK energy regulator, and the Department for Energy Security and Net Zero (DESNZ) has outlined proposals for regulating the sector and consumer protection requirements.
Developers, local government and consumers are encouraged to submit their views on pricing, quality of service and transparency of information.
Views are also being sought about consumers in vulnerable circumstances, as well as the scope of the rules and how they should be phased in.
In a foreword to the consultation, Lord Callanan, parliamentary under-secretary of state at DESNZ, explained that it is a government priority to grow the heat network sector.
READ MORE
Regulation, he wrote, would provide heat network consumers with “certainty of the standards they can expect”, and increase investor confidence “to funnel capital towards large-scale, low-carbon heat networks.”
The Energy Bill, introduced to parliament last year, appointed Ofgem as regulator in Great Britain and licensing authority in Scotland for heat networks.
The bill gave Ofgem powers to take compliance and enforcement action to ensure the sector complies with consumer protection measures.
The bill includes a licensing regime to enable people building new heat networks or modifying existing ones to be given the same powers as other utilities, such as the right to dig up roads. It also provides for establishing step-in arrangements to protect consumers in the event that their supplier goes out of business and to ensure their heat supply is maintained.
Jonathan Brearley, chief executive of Ofgem, said: “We need to consider how we can best protect consumers in vulnerable circumstances, particularly in the unique circumstances of the heat networks sector, such as the inability to switch suppliers.”
An impact assessment published alongside the consultation forecast that over a 30-year period the regulation would cost £278.8m and provide a total benefit of £875.5m, giving a net benefit of £596.7m.
The consultation closes on 27 October.
The was welcomed by Bindi Patel, head of customer experience at Vattenfall Heat UK.
She said: “This consultation is part of a wider regulatory framework to increase the deployment of heat networks to provide 20% of all heat demand by 2050, while ensuring customers connected to a heat network are protected and guaranteed a high-quality service.
“Ensuring consumers are a ‘central pillar’ of an incoming regulatory environment was a key request.”
Inside Housing revealed in June how only a small proportion of housing providers have registered their heat networks online ahead of a government deadline, which has now passed.
The government was offering a discount on commercial energy prices for heat network customers until March 2024. Housing providers have to alert residents that they are benefiting from the discount.
Regardless of whether providers will benefit from the discount or not, they were required by law to register all their heat networks before 25 July via an online portal.
Fines for non-compliance will be up to £5,000 per heat network.
Sign up for our regulation and legal newsletter
Already have an account? Click here to manage your newsletters
