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• Over half a million families on communal and district heat networks excluded from Energy Price Guarantee – with some facing bills of over £500 a month
•  Families on heat networks with communal electricity are yet to receive a penny of government support despite repeated promises

 A consumer champion is calling for the government to deliver on its promise of support for more than half a million families who are not protected by Ofgem’s new price cap or the Energy Price Guarantee.

Heat Trust, the consumer body for people living on communal and district heat networks, says that, without price cap protection, some families are paying more than £500 a month in bills.

To make matters worse, although the majority of households are about to receive the final payment of the £400 electricity bill discount scheme, families on heat networks with communal electricity are only just able to apply for financial help. Until now, they have been excluded from the Energy Bills Support Scheme.

It means people living in homes on heat networks, in park homes, or other off-grid homes without a contract with an energy supplier have been left ‘in the cold’ without help over the energy price crisis.

Heat Trust is urging the new Energy Security and Net Zero department to prioritise a proper support package for heat network customers.

Speaking on the new price cap, Stephen Knight, Director of Heat Trust, said: “There is already concern over how households will be able to cope with another rise in energy prices on 1st April, but many families on heat networks are already paying at least two to three times as much for their heat as those with domestic gas boilers.

“It adds insult to injury that the majority of households are receiving their final £66 electricity discount payment next month, and yet families with communal electricity are only now being invited to apply for the funds and still may not see a penny for months to come.

“I urge the Government to make extra support a priority in the upcoming Spring Budget."

Ofgem has announced that from 1st April, its price cap would result in average energy prices being capped at £3,280, although the Energy Price Guarantee currently replaces the price cap and is expected to limit average annual energy bills from 1^st April to £3,000, with average gas unit costs expected to be around 12.4 p/kWh.

In contrast, some families on heat networks are receiving bills as high as 53 p/kWh for heating and hot water.

Why are heat network customers excluded from the price cap?

Heat networks are not currently regulated by Ofgem and the price they charge for heat is not subject to any price cap. The network operators (usually the building owner/freeholder or an appointed energy company) buy the gas for the communal boilers on the commercial gas market, before creating heat for the homes.

In the past, companies could buy gas more cheaply than individual domestic customers. With commercial gas prices largely unprotected by caps or price guarantees, this is no longer the case and the operators then pass on the high prices to their heat customers.

In July 2022, the Government introduced an Energy Bill into Parliament appointing Ofgem as the regulator for the fledgling heat network industry to ensure fair prices and a reliable supply of heat.

Heat Trust and Ofgem have already been working together to design the regulation for heat networks, but a price cap or similar pricing measure is not likely to be in place for several years.

Heat network customers still face massive heating bills unsupported by any equivalent to the Energy Price Guarantee

Heat Trust has welcomed the creation of a new government department focused on the UK’s energy crisis and is urging ministers to prioritise action for more than 500,000 households still locked out of support with their bills. 

The Prime Minister Rishi Sunak today (Tuesday, February 7) confirmed that a newly created Department for Energy Security and Net Zero will be tasked with securing the UK’s long-term energy supply and bringing down bills.

The government has also launched a £32 million fund to upgrade heat networks, with a view to improving their efficiency and making them cheaper to run for households.

Stephen Knight, the Director of Heat Trust, the national consumer protection scheme for people living on heat networks, says that while the news is welcome, there are over half a million families living on communal or district heating schemes, many of whom are paying around three times as much for their heat as those with gas boilers because they still have no equivalent financial support to the Energy Price Guarantee, five months after it was promised by government.

He said: “We see the creation of the new Department for Energy Security and Net Zero as a welcome signal that the government is prioritising energy policy, concerns around the market and spiralling bills.

“Heat Trust has long called for investment to improve the efficiency and reliability of heat networks as a way to deal with rising consumer bills. The £32 million fund is a step in the right direction and will help create a better service for consumers.

“However, there is still no effective price support scheme in place for heat network customers, equivalent to the Energy Price Guarantee protecting those with gas boilers - despite this being promised five months ago – leaving many customers paying around three times as much for heat as those with gas boilers.  In practice this means many customers simply cannot afford to heat their homes or run a bath.

 “Some heat network customers, where their landlords also bills them for electricity, are still awaiting news on how they can access the £400 Energy Bills Support Scheme that was promised by the government seven months ago.

“Despite promises that support for these households would be available by the end of January, a decision has once again been delayed. We might be in Spring by the time the money reaches families in this situation – we urge the government to make support available now.

“Heat networks hold massive potential for enabling the decarbonisation of heating, but customers must be at the centre of policy choices, so we look forward to hearing updates from the new department. We will continue to work with the government, energy companies, and landlords to ensure we all act in the best interest of consumers and facilitate incoming regulation.”

Government U-turn leaves families facing heating bills double that of those protected by the Energy Price Guarantee

The national consumer champion for heat networks is criticising the government’s decision, announced on Friday, to scrap a promised emergency £100 payment to households on heat networks. It leaves 500,000 homes on communal or district heating systems paying around twice as much for heat as those with their own gas boiler heating system.

While Thursday’s fiscal statement announced some support for struggling families this winter, BEIS has since made a U-turn on specific help for heat networks customers.

Heat Trust, which runs a consumer protection scheme for homes that share communal or district heating systems, is asking the government to think again.

The consumer body previously warned that residents could receive winter heating bills as high as £1,000 a month.

Following the Autumn Statement, Stephen Knight, the Director of Heat Trust, said: “When we heard that the government would be doubling the ‘alternative fuel payment’ from £100 to £200, we thought that finally, it was good news for the 500,000 homes in this situation.

“To hear now that the meagre amount of support that had been promised to heat network customers has been snatched away at the 11^th hour is a kick in the teeth for these customers, many of whom have been struggling to pay inflated and un-capped bills for the past year.”

These families are excluded from the Energy Price Guarantee because heat networks are not regulated by Ofgem. Although Heat Trust is already working with the government and Ofgem to design regulation and bring down bills, they say help cannot come soon enough.

Mr Knight confirms he has repeatedly heard promises of extra support from the then Business and Energy Secretary Jacob Rees-Mogg during the Second Reading debate of the Energy Prices Bill, as well as from BEIS civil servants since.

“With at least half a million households on heat networks who will have to choose between eating and heating their home, these payments are a lifeline. It’s essential that the government rethink its decision and immediately reinstate this vital support.”

The government plans to expand the number of heat network schemes to cover up to 5 million households as part of its strategy to decarbonise heating.

With more than half a million households living with unregulated communal heating systems that fall outside of the energy price cap, a consumer body is advising landlords and heat network operators on handling concerns around soaring bills.   

Heat Trust, which runs the voluntary consumer protection scheme for heat networks, is urging heat providers to offer flexible payment plans among other measures to help support families struggling to pay their bills.

The body had warned that residents could receive winter heating bills as high as £1,000 a month before the recently announced government support.

As heat network operators await news on how their tenants and leaseholders will receive financial help promised by Liz Truss, Heat Trust is still expecting energy providers and landlords to experience an influx of billing disputes and complaints.  

Stephen Knight, Director of Heat Trust, who is currently working with Ofgem on upcoming regulation for the sector, said: “As we enter the heating season during a time of unprecedented energy prices, it is vital that heat suppliers make sure they bill customers accurately.  

“Even with the government support, residents with communal heating could still face bills twice the price of those with traditional gas central heating. 

“This means energy providers need to be prepared to accommodate reasonable customer requests for flexibility in payment arrangements.” 

A new best practice guide issued by Heat Trust highlights the advantages of dealing with complaints in a reasonable timeframe and the value of feedback for making improvements. 

By resolving issues on a case-by-case basis and, when appropriate, offering reparation reflecting the inconvenience caused to the customer, suppliers will not damage trust and give families the best chance of avoiding fuel poverty. 

The guidelines also emphasise the importance of having well-equipped teams to respond to customers across all communication channels with empathy, efficiency, and professionalism.   

Stephen Knight added: “We understand that heat network operators – such as social landlords and local councils – are also experiencing financial challenges. 

“But these families are not protected by a price cap, or the Energy Price Guarantee.

“These guidelines will ensure better support is in place for those struggling with their bills. 

“It is also the chance to review processes and improve customer service – which is all the more important given the upcoming regulation. We encourage any operators who haven’t done so already to register their heat network with Heat Trust to provide their customers with the best possible protection.” 

Access the guides on the Heat Trust website here.

District and communal heating suppliers must do more to address reliability issues and heat losses according to Heat Trust, which today published annual monitoring data on the sector.

The 104 heat networks registered with Heat Trust recorded 808 unplanned interruptions to supply caused by issues with the generation or distribution of heat around the networks, implying that the average customer would have experienced around six such interruptions in the year, this represents a significant increase on the 2020 figures, but is similar to the 2018 and 2019 figures.

In the light of the current crisis in gas prices, Heat Trust also highlighted that more needs to be done to address heat network heat losses, which are currently leading to very high heat prices for some customers.

Today’s report reveals that more heat providers are signing up to Heat Trust’s customer protection standards ahead of planned statutory regulation due in around 2024. Heat Trust is working closely with government and Ofgem to help develop these future regulations and the government has urged all heat networks to sign up to the scheme to ensure they are regulation-ready.

Heat Trust is the consumer protection champion for the heat network sector and aims to put customers at the heart of the rapidly expanding heat network market. It sets consistent customer service standards for the sector, equivalent to the legal standards set by Ofgem for domestic gas and electricity suppliers. The Scheme Rules ensure that customers who experience the worst supply interruptions receive compensation.

Up to five million homes could be reliant on the heat network infrastructure by 2050, a ten-fold increase from the estimated 500,000 homes currently on heat networks in the UK.

In its sixth annual report covering the year 2021, it found that:

• In 2021 Heat Trust provided protection to customers living in around 61,000 homes, up from 52,000 the previous year.
• There were 808 unplanned interruptions to supply caused by issues with the generation or distribution of heat around the networks, implying that the average customer would have experienced around six such interruptions in the year;
• Supply suspensions for debt have risen to their highest level since 2018; and
• The number of complaints taken to the Energy Ombudsman that were within their remit (Terms of Reference) increased from 80 in 2020 to 124 in 2021.

The government has called on all heat network providers to register with Heat Trust in advance of forthcoming statutory regulation to provide assurance to their customers and to ensure they are ready for regulation. More councils and housing associations are now registering their heat networks with the scheme.

Heat Trust Director Stephen Knight said: “Heat networks have a vital role to play in the decarbonisation of heating systems in the UK, as they can enable surplus and waste heat to be used to keep homes warm.  They can also be used to reduce the capital costs associated with decarbonisation of heating, by enabling the sharing of expensive low carbon infrastructure.

“However, to be widely accepted by customers, the industry needs to do more to address consumer detriment issues with existing heat networks, to build public confidence in this important technology.

“Our data shows that heat network customers continue to experience far too many supply interruptions, and we also know that high heat losses can lead to customers paying too much for heat.  These two issues must be addressed if the sector is to provide the ultra-reliable, affordable heating that customers need.

“When heat networks are registered with Heat Trust, consumers get a better experience. That needs to be at the heart of the sector’s growth plans.

“Regulation is only a few years away, so it is essential that heat network providers get prepared and have guaranteed service standards in place.

“Heat Trust is continuing to work with the Department of Business, Energy and Industrial Strategy and Ofgem on plans for regulation, and we will play an important role in making sure the sector is ready for this.”