The Competition and Markets Authority (CMA) has announced that heat networks in Great Britain must be regulated after publishing the final findings of its 7-month study
Heat networks provide homes with heat and hot water from a central source via insulted pipes, but unlike other energy services, are currently not regulated. As a result, heat network customers have less consumer protection if things go wrong.
The CMA found many heat networks offer prices that are the same or lower than those paid by people on gas or electricity, and customers receive comparable levels of service.
However, a number of those on privately operated networks are getting poorer deals in terms of price and service quality, and there is a risk this problem could grow.
There are currently around 450, 000 customers of these services, and that number is expected to grow significantly as investment in energy efficient technology increases.
The CMA is, therefore, recommending that the regulator once it is established:
- introduces consumer protection for all heat network customers so they get the same level of protection as customers in the gas and electricity sectors
- addresses low levels of transparency so customers know they are on a heat network and there are clear agreements or contracts between customers and heat network operators
- makes sure customers are aware of what they are paying as this is often unclear
- protects customers from poorly designed, built and operated heat networks by preventing developers from using cheaper options to meet planning regulations that end up being paid for by the customer over the longer-term
CMA Chief Executive Andrea Coscelli, said: “With 14,000 heat networks supplying 450,000 people with heating across the UK, they can be an efficient and environmentally-friendly way for people to heat their homes.
“But there are problems with how some operate, especially for those in private housing. People must benefit from the same level of protection as those using gas or electricity, and not be penalised either by paying too much or receiving a poor-quality service.
“There is currently no regulator for this part of the energy sector – we think that is one of the key problems to be addressed and we recommend Ofgem is given this role.”
Dermot Nolan, chief executive of Ofgem, said: “Our principal aim is to protect the interests of current and future energy consumers. We welcome the CMA’s Market Study on heat networks and agree that heat network customers should get the same level of protection as customers in the gas and electricity sectors.
“We look forward to continuing to work with the government to address the current and future challenges in decarbonising heat and would welcome the opportunity to contribute to the development of the future regulatory arrangements for heat networks.”