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Meet your obligations with heat network regulations

Posted by Ian Allan

Monday 11th April, 2022

Energy price rises: How will communal heating customers be affected?

Posted by Yanik Croston

It has been the talk of many since the energy price rise announcement but 1st April marked the first day of the energy price rises for all consumers...

Around 22 million customers across the UK will be affected by the rises, which are the result of a 54% or £693 increase to the energy price cap, which is set every six months by energy regulator, Ofgem. However, for customers who are supplied heat and hot water via communal heating, also known as a heat network, they are not currently protected by the energy price cap and could face exponential rises above and beyond the 54%.

Why are heat network customers not protected by the energy price cap?

Customers who live in flats that are being served by heat networks are supplied by a single energy provider who procures and operates the energy for that network. This means that their supply is considered to be ‘commercial’ rather than ‘domestic’ and operators of heat networks, or associations buy their gas on the open market.

Commercial gas prices are currently around four times pre-crisis levels, with consumers and landlords operating heat networks already reporting some extreme examples of price rises of up to 700%. As these prices are not protected by the price cap, the market and consumers are left much more exposed.

For customers who are currently supplied by a heat network, because they are supplied by ‘commercial’ rather than ‘domestic’ gas, it is likely that they have been exposed to the increases much sooner than domestic gas customers who are protected by the price cap. Unfortunately, the price cap increase means that, from 1st April, all consumers will feel the pain of higher energy bills across the whole energy market.

Are heat networks regulated?
At present, heat networks are not regulated. This means that customers who are served by a heat network do not get the same levels of customer protection as standard utility customers.

Some heat network customers may live on a scheme which is registered with the Heat Trust, an independent, non-profit consumer champion for heat networks whose aim is to benefit everyone involved in the network. Although the Heat Trust can provide consumers with some reassurance, they are not a regulator.

Heat network regulation is changing, however. In 2014, the Government introduced the Heat Network Metering & Billing Regulations which aim to ensure that customers supplied by heat networks are only charged on their usage and have access to clear, transparent billing with heat meters installed into properties.

As the Government foresees growth in heat networks as a low-carbon way to provide heat and hot water to homes, they realise that more needs to be done to protect consumers. In December 2021, after consultation, the Heat Network Market Framework was introduced, which appointed Ofgem as the dedicated regulator for heat networks.

This is good news for customers on heat networks and Switch2 welcome the news, however the transition to Ofgem is ongoing which means that for the moment, customers remain unprotected.

Are heat network customers eligible for any of the Government support measures?

Heat network customers may have been considering Government measures such as the Warm Home Discount Scheme or the £200 Government loan which comes into place in October, to help with the rising cost of energy bills.

Unfortunately, unlike customers who are supplied by a standard utility provider, heat network customers are exempt from the Warm Home Discount Scheme and the Government loan in October of £200.

What can Switch2 do to help with energy bills?

We understand the financial impact the prices rises are having on household budgets, and we are committed to supporting our customers throughout this difficult period. If your residents need support with the rising energy costs, our dedicated customer service teams are here to help.

Switch2 operate in line with the Heat Trust and can provide customers with independent advice based on their individual circumstances, or set-up payment plans to make managing the cost easier. We also work alongside many charities and not for profit organisations who can provide expert energy advice and financial assistance to customers, including energy efficiency tips on how to reduce bills and financial grants for eligible households, to help with future payments.

If you’d like any further information about the rising cost of energy bills, then contact us by email at customerservices@switch2.co.uk or give us a call on 0333 321 2010.

We understand it’s a difficult time for many households and we will do what we can to support throughout.

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