With the energy price cap rising once again, and growing pressure to meet net zero targets, heat network operators, across all sectors of the industry, are rethinking how they are billing their residents. One model under increasing scrutiny is flat rate charging, where residents pay a fixed fee, regardless of their consumption. But does this approach offer fairness and efficiency, or is there a better way?

Our blog explores how metered consumption-based billing compares to flat rate charging and why more operators are making the switch to metering in 2025.

What is Flat-Rate Charging in Heat Networks?

Flat-rate charging is a billing model where every resident pays the same amount for heating and hot water, typically included as part of their rent or service charge. While this model simplifies billing, it can, and inevitably does, lead to overuse of energy and unfair cost distribution.

Residents who use less energy end up subsidising high consumption users, with no financial incentive for anyone to reduce their consumption. This not only increases costs for providers but also undermines efforts to improve energy efficiency and reduce carbon emissions.

Take a walk around an urban area in colder months and you can easily pinpoint apartment buildings that have flat rate charging – usually residents will opt to open a window instead of turning off their heating.

The Case for Heat Metering

Installing individual heat meters, or even better Smart Metering systems, such as the G10, allows residents to be billed based on their actual energy use; consumption-based billing.

This approach offers multiple benefits:

• Fairer Billing: Residents only pay for what they use, promoting fairness.
• Reduced Consumption: Real-time feedback encourages energy-saving behaviours. In Sheffield, the introduction of heat meters resulted in average bill reductions of up to 50%.
• Environmental Impact: Reducing energy waste supports housing providers’ Environmental, Sustainability and Governance (ESG) goals, and decarbonisation targets.

Why It Matters Now: 2025 and Beyond

With energy prices up significantly since 2023, and tighter regulations on heat network performance coming into force as soon as 2026, many operators will find the financial burden and inability to react to a changing market that results from including energy costs into pre-agreed rent or services charges required by a flat rate model to be unsustainable.

Following the 2020 updates to the Heat Network (Metering and Billing) Regulations, there is increasing pressure to install heat meters wherever feasible.

Funding programmes such as the Heat Network Efficiency Scheme (HNES), along with the forthcoming technical standards under the Heat Network Technical Assurance Scheme (HNTAS), clearly signal that future regulations will likely tighten exemptions and strengthen the obligation to meter. Switch2 has long been an advocate for the benefits of metering and strongly recommends that operators begin installing meters as soon as possible. This proactive approach not only ensures compliance with evolving regulations but also maximises payback periods and unlocks the full value that metering can deliver.

Real-World Impact: Sheffield City Council Case Study

Following a major heat metering retrofit, Sheffield City Council reported:

• 49% average reduction in energy use
• Significant resident cost savings
• Lower operational costs for the council
• Progress toward environmental and social value targets

This real-world example shows how switching from flat rate charging to heat metering delivers both financial and environmental gains.

Time to Rethink Flat-Rate Charging?

Flat-rate charging may offer simplicity, but at a high cost both financially and environmentally. As heat network operators face mounting regulatory and financial pressures, heat metering offers a path to fairness, efficiency, and sustainability.

Let’s Talk About Heat Metering

Interested in making your heat network fairer and more efficient? Get in touch for a free consultation on how Switch2 can support your transition to smart heat metering.

FAQs: Heat Metering and Flat-Rate Charging

What is flat rate charging in heat networks?

Flat rate charging means residents pay a fixed fee for heating, regardless of how much they use. It can lead to energy waste and unfair billing.

How does heat metering benefit residents?

Residents only pay for what they use, often lowering their bills and encouraging energy efficiency.

Are housing associations required to install heat meters in 2025?

While exemptions exist, updated regulations encourage metering wherever feasible, especially for funded retrofit projects.