Reports of bills rising by up to 700% on some schemes

A consumer protection body has warned that more than half a million households on communal and district heating networks should not be locked out of any government support to protect people against spiralling gas prices.

Heat Trust, the independent national consumer protection scheme for heat networks, says those living on communal or district heating systems are set to be amongst the worst affected by the soaring cost of gas, which is driving up heating bills. 

The government’s price cap does not currently apply to the heat network market where operators have to buy gas on the commercial rather than domestic markets.  Commercial gas prices are currently around 4 times pre-crisis levels.

Heat networks are seen as a major part of the UK’s decarbonisation plans, and can deliver low carbon, low cost energy to homes. However, as the market is currently unregulated, consumers are not protected in the same ways as other energy markets. 

Commercial gas saw a 1000% price increase last year, rising from 1.5p per unit to 15p per unit before Christmas. The price is currently hovering between 6p and 7p per unit.

Consumers and landlords operating heat networks are already reporting examples of price rises of up to 700% - the equivalent of a price of milk rising to £3.85.

Heat Trust is calling for urgent government intervention by:

  • Allowing heat network operators to purchase gas at the capped domestic tariff rates and pass on the saving to consumers
  • Ensuring heat network operators and consumers are able to access any government support aimed at helping families forced to choose between eating and heating
  • Bringing forward its plans to regulate the heat network market via Ofgem which were confirmed in December last year

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Stephen Knight, Director of Heat Trust, said: “The government is fully committed to making heat networks a key part of its energy policy, and must not leave families living on these schemes behind.

“Heat networks have the potential to offer low-cost, low-carbon heat, but without intervention hundreds of thousands of families are facing horrendous and unaffordable heating bills this winter."

Heat Trust is also calling for changes to the Landlord and Tenant Act rules which currently makes it difficult for landlords to buy gas more than 12 months in advance, making them vulnerable to price fluctuations. If they could buy gas for longer periods of time, it would further protect consumers from market volatility.

Knight added: “Our mission is to protect heat network customers.

“Gas price increases such as those experienced at the end of 2021 are simply not sustainable for heat network customers. They are driving up household bills in unprecedented ways – many people will have to choose between heat and food.

“Heat networks are becoming increasingly common with social landlords, meaning the most vulnerable people in society are the ones most affected by the current crisis. We can’t let that happen.”