Thursday 6th February 2020

Today, the Department of Business, Energy and Industrial Strategy (BEIS) published its consultation on a market framework for heat networks. The consultation confirmed that government intends to provide powers to Ofgem to be the statutory regulator for the sector.

Heat Trust welcomes the consultation and supports the decision to appoint a sector regulator.

The key proposals in the consultation centre on licensing and an authorisation regime:

  • The proposed legislative changes will give heat network developers equivalent statutory rights and undertakings to other utilities, such as gas and electricity. A licensing arrangement will be established for those parties that wish to secure these additional powers.
  • The proposed authorisation regime for consumer protection would give Ofgem oversight and enforcement powers across quality of service, provision of information and pricing arrangements for all domestic heat network consumers. This would be funded through fees scaled according to the regulated party’s size.

BEIS highlights the work of Heat Trust in the consultation, noting that by registering with Heat Trust now,
“organisations will not only be able to demonstrate the quality of their service to consumers right now, but they will also be better prepared for the transition to regulation.”

Bindi Patel, Director at Heat Trust said:

“This is a milestone moment. We welcome and support confirmation from government of its plans to introduce statutory regulation. Heat networks have an important role in decarbonising our heat supply. This consultation sets out an enabling framework to support industry, and importantly, ensures customers served by heat networks are robustly protected, and enjoy the benefits of low carbon heat.
 
“We are pleased that BEIS has stated that customer protection should apply to all residential and micro-business heat network customers. Work to deliver this ambition now begins, and we look forward to sharing our learnings and experience with government and Ofgem to help inform new regulation.”
 

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Notes

Heat Trust is all about protecting heat network customers.

We are an independent, non-profit consumer champion for heat network customers that holds the industry to account for the benefit of everyone involved. We make sure customers enjoy heating systems fit for the future by:

  • Applying strict customer service standards to heat suppliers, similar to those for traditional gas and electricity suppliers;
  • Providing access to an independent dispute resolution service through the Energy Ombudsman; and
  • Working with suppliers to promote best practice, innovation and continuous improvement in customer service.

Launched in November 2015, Heat Trust provides protection to over 10% of residential and micro-business heat network customers. Our annual reports can be found here.

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Contact details
Bindi Patel
Director
Heat Trust
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Are you motivated by ensuring the needs of customers are placed at the heart of service delivery? Are you interested in the role that the energy sector has in decarbonising our heat supply? Do you have experience in independent governance?

Heat Trust is seeking to appoint an Independent Chair for its Stakeholder Committee. Please find the description and person specification here. We would love to hear from you.

Read Newsletter - Winter 2019

Heat Trust’s third annual report was published this week, revealing that they now provide protection to 10% of the market. Reflecting on the experience gained over three years, the report sets out key principles to consider as regulation of the market is developed.

Bindi Patel, Director at Heat Trust said:

“Heat Trust has been working to support the adoption of minimum customer service and protection standards across the heat networks sector since 2015. Regulation is an important next step. With ambitions for a significant proportion of homes and businesses to be served by heat networks, it is essential that heat networks provide reliable low carbon heat and that customers receive the same protections as other energy customers.”

Other principles identified include the need to ensure consistency between different nations as Scotland proceeds with its plans for heat networks regulation, focusing on customer outcomes to allow flexibility on how services are delivered, and integration with wider regulatory developments. Bindi noted:

“Regulation of heat networks is taking place during a time of rapid transition across the energy market. It is important that heat network regulation is considered alongside other regulatory changes in the energy market, and that customers on heat networks can access and benefit from future innovation.”

The report provides a summary of performance of heat networks registered with Heat Trust over the previous year, revealing that technical issues, billing and charges were the most frequent issues raised by customers. Over the year:

  • There were 4,657 complaints recorded by Registered Participants
  • The majority of complaints related to technical issues (42%) followed by billing and charges (34%)
  • There were 63 planned interruptions and 745 unplanned interruptions
  • The majority of unplanned interruptions were due to issues affecting generation equipment

Variation in how different suppliers collect performance data emphasises the need for industry-wide performance metrics – a call first made by Heat Trust in its inaugural annual report.

This report also provides details on complaints that were received by the Energy Ombudsman. The data from the Energy Ombudsman covers 1st January 2018 – 31st December 2018. During this 12-month period:

  • There were 83 complaints within the Ombudsman’s terms of reference (TOR)
  • The majority of complaints were due to billing (60%)
  • Of complaints within the TORs, 63% were upheld by the Ombudsman and a further 23% reached a Mutually Acceptable Solution
  • A goodwill payment was awarded in 72% of cases, the average award was £105.61

For the first time, Heat Trust has been able to include data on debt and supply suspensions. The report notes that this is an area of importance and in particular, identifies areas for improvement to support debt management.

“Our work has focused on setting minimum standards and collecting data to build a picture of current practices. We continue to work with stakeholders across the market to support the sector and champion good outcomes for heat network customers. A government consultation setting out the first proposals on heat network regulation is expected next year. We look forward to sharing our experience and knowledge with stakeholders, governments and indeed a future regulator to support development of a robust regulatory framework.”

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Read Newsletter - Spring/ Summer 2019