Protecting communal heating system customers

If operated effectively, there is no doubt communal heating systems can be more efficient, lower cost, and emit less carbon dioxide than gas or other alternative heating models.

However, there is a real risk that the environmental benefits of district heating are being undermined by systemic problems within the district heating industry.

Since I was first elected in 2015, I have taken up numerous cases in which residents on new build developments across the constituency have experienced problems associated with communal heating systems.

Each and every complaint relating to heat networks that I have received has been unique but each share a set of common concerns relating to tariff pricing, standing charges, an apparent lack of transparency with regard to consumption and billing, and the reliability of supply.

The UK district heating market is still in its infancy and so low levels of consumer confidence might be expected. What exacerbates the low levels of consumer confidence in this area is the absence of consumer choice.

If district heating customers enjoyed the same freedom of choice that others on the grid do, they could respond to concerns over pricing and transparency by switching supplier. Instead, they are locked to monopolies from which there is no escape.

District heating suppliers have sought to build trust and confidence in the market by establishing the Heat Trust, an initiative sponsored by the Association for Decentralised Energy (ADE). Given the levels of consumer mistrust that now exist, this industry-led approach can only ever be an interim solution.

First, the voluntary nature of the Trust does not guarantee universal coverage for all district heating consumers. Second, it will do little to reassure customers that the market operates on the basis of fair and consistent pricing, particularly when one considers that the Heat Trust’s pricing formula is benchmarked to gas networks that utilise very different technologies. Third, it is not an adequate substitute for the redress provided by a sector Ombudsman.

The current state of affairs cries out for effective statutory regulation. I have been trying since receiving my first block-wide complaint in the autumn of 2015 to convince the Government to legislate for it.

I have also generated media coverage regarding the problems that district heating customers face and I played a role in pressing the Competition and Markets Authority (CMA) to carry out a review into the sector which, when it reported, recommended the Government introduce statutory regulation.

I met with the Energy Minister, Claire Perry, in June last year and I believe I convinced her of the need for statutory regulation. However, the Government still need to pass the necessary legislation and so I continue to press BEIS Ministers to bring it forward to ensure customers do not have to wait any longer than necessary for the protection they deserve.

For that reason, I applied for and secured a debate in Westminster Hall on 19 February to set out my concerns in full and urge the Minister to redouble her efforts to provide heat network customers with immediate protection. You can read my speech here.

It was still a disappointment that in her response the Minister did not provide me with a timescale as to when we might expect communal heating systems to be statutorily regulated.

However, she did commit to writing to energy suppliers to pressure them to register all of their schemes with the Heat Trust (the industry-led body that provides limited customer protection for the district heating sector) and I spoke to her and her civil servants in more detail about the matter after the debate.

Cajoling heat network operators into registering all their schemes with the Heat Trust would not be a panacea but if successful it would at least ensure that heat network customers can take cases directly to the Energy Ombudsman.