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Heat networks should be regulated, says CMA

Some district heating customers pay more for gas and electricity

Some people living in privately owned or rented properties are paying more for their heat through a heat network, according to a study released today by the Competition and Markets Authority (CMA).

And across the board, heat network customers aren’t getting the same levels of consumer protection which gas and electricity customers receive.

The CMA is now looking to regulate the sector – a move welcomed by Which?.

The CMA study into the 14,000 UK heat networks aimed to establish whether customers were getting a good deal.

The key findings

The CMA found three main areas of concern:

  1. Design and build – property developers who cut costs of installing a network can pass the extra costs onto customers because of higher operating costs. The CMA also found some networks are installed to meet planning requirements instead of being the best fit for customers.
  2. Monopoly of supply – often customers have no alternative sources of heat so can get trapped in long-term contracts.
  3. Low transparency – before someone moves into a new property, often they don’t know that their energy will be supplied by a heat network. Then once they’re living there, their bills aren’t transparent.

The CMA had said its provisional view is that the sector should be regulated to address these three issues.

CMA senior director Rachel Merelie, said: ‘Heat networks can play an important role in cutting carbon emissions and keeping down energy bills, but some customers are not getting a good deal for this essential service.

‘Our current view is that regulation is now needed, to ensure that heat network customers receive equivalent levels of protection to gas and electricity customers.’

Problems with district heating networks

Which? has uncovered major issues people experience on district-heating networks, which include:

  • Long-term contracts of 25 years or more, meaning customers can’t switch
  • Unclear billing which leads to doubts over how efficiently schemes are run
  • Poor customer service and complaints handling
  • Estate agents not being up-front about heating costs or provision, which may have misled you

If you have a problem with your district heating, there are some steps you can take to resolve the issue.

Regulation of heat networks

The CMA has proposed better regulation of the heat network sector would include:

  • better protections for heat network customers, including access to an ombudsman and support for vulnerable customers
  • steps to improve how networks are designed and built
  • mandatory rules and criteria aboout price and quality in long-term contracts
  • improved transparency by providing better information on networks, heat supply agreements and clearer, more detailed bills

Heat network customers need a better deal

Which? managing director of home products and services, Alex Neill, said: ‘With more and more people getting their energy through heat networks, action is needed to ensure that consumers are better protected.

‘We’ve heard from people who have had issues with their bills, have struggled to get their complaints resolved, and who have not been given clear information about these networks before moving into a property.

‘The competition authorities are right to recommend steps to make heat networks better regulated, to ensure that people have access to an Ombudsman and to give them clear and transparent information.

‘Its vital that this now results in a better deal for the half a million households who get heating through these schemes.’

The CMA is working with the UK, Scottish and Welsh governments on the recommendations.

The CMA will consult on the recommendations until 31 May before publishing a final report in the summer.

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