On 6 September, leaders from across the housing sector met to learn more about new consumer protection regulations from the energy regulator Ofgem from a series of presentations from Housing Forum member Insite Energy.
Eelinn Vanquaethem, Marketing & Content Manager, Insite Energy, provided an introduction to Ofgem’s regulations.
Heat networks are any system supplying thermal energy to more than one end user. This heat is generated from a single source and sent to several properties, sometimes in the same building.
Heat networks are a particularly useful way to meet UK Net Zero targets but only 3% of UK heat is provided by heat networks. This needs to increase to 20% by 2050, so there is considerable opportunity for growth in the sector.
For this growth to happen suitably, new regulations have been needed, particularly since consumers of heat networks are unable to change their service provider in the same way that, for instance, an electricity provider could be changed.
Two tranches of regulations will come, with the first tranche coming in 2025 to come into action in 2026.
Within a heat network, there are several roles. Consumers consist of domestic households or micro-businesses. Heat network operators have significant control over heat network assets and heat network suppliers have a heat supply contract or equivalent with the customer, these are the organisations subject to regulations. Service providers also have a role in helping suppliers and operators meet regulations.
Emily Lister, Sales & Marketing Director and Alex Brobyn, Business Development Associate talked through the major elements of the new regulation.
Pricing data will need to be reported as part of quarterly data monitoring. Price caps may be considered in future if there is evidence of significant consumer detriment. Options are being evaluated including for a full heat network register, a segmented approach based on heat network types, and a RAG system based on a benchmark. From 2025 this reporting element will come into play, displaying costs, profits, and network efficiency. From 2026 Ofgem will carry out a price investigation based on the data gathered so far to encourage standardisation.
Quality of service, supply of heat are key parts of the new regulation. Free advice will be delivered by Citizens Advice from Spring 2025 around heat networks, to handle escalations and monitor breaches of regulations. From 2026 robust procedures will need to be in place to handle expressions of dissatisfaction and formal complaints, and these must be reported accurately to Ofgem.
Guaranteed standards of performance will also be in place, requiring consumers to be compensated for any breaches. Suppliers of last resort will be able to step in in cases of particularly extreme breaches of regulation, including repeated breaches or insolvency. Quality of life improvements will be needed, including prompt scheduling and honouring of appointments after supply drops.
Consumers in vulnerable circumstances is part of the focus of new regulations. A key requirement will be for a priority services register to identify vulnerable customers and to identify support which might be relevant for individual vulnerable residents. Heat network operators will be required to offer advice and help to manage payments. Prepayment meters have been a particular focus recently, and these are being refined currently to protect heat network users. Explicit user consent will be needed before installing these, and information will need to be available on how much money has been sent.
Transparency of information is also a factor. Ofgem will be enhancing educational resources for heat networks, with a burden of responsibility on property sales teams. EPCs will be updated to reflect heat network provision, and providers will be expected to provide welcome packs with contact information, including for repairs and emergencies. Tariffs, price information, and routes of redress will also be required to be shown to consumers.
Regular billing will be mandated based on actual usage or estimated usage when this is not known. Smart metering will be encouraged. Multiple payment options need to be offered and financial support should be signposted. New protections will be put in place for backbilling over 12 or 18 months, and there will be a minimum 31 day notification period for tariff increases. There will also be an overarching standardisation of metering, including smart metering to improve accuracy and encouraging users to be more energy efficient.
Insite Energy has more resources to help the housing sector to get up to speed with new information, these can be found on their website.
After their presentation, the team at Insite Energy answered a number of questions, including what landlords and housing providers can do to prepare for the new regulations, and how heat providers can ensure that consumer costs are similar to traditional heat sources.
Thank you to Insite Energy for putting together such an interesting and informative event.
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