The Government’s new Energy Bill, which is the first new energy sector legislation for nearly 10 years, includes powers to regulate district and communal heat networks to improve customer protection and will be debated for the first time in the House of Lords on 19th July.

Heat Trust, the national consumer protection scheme for heat networks, has long advocated statutory regulation of the sector, and so welcomes this important milestone.

Regulation is needed to address existing problems with the sector as well as to ensure customers are protected as this important sector grows to meet the Climate Change Committee’s (CCC) objective of 18 per cent of national heat demand being met via heat networks by 2050, in line with the UK’s net-zero targets.

In the absence of regulation, Heat Trust reports that there are too many examples of poorly executed heat networks that are unreliable (leading to frequent interruptions to supply) and extremely inefficient, which in the light of currently inflated gas costs, can result in very expensive heat being delivered to consumers.

Heat Trust has been working closely with BEIS and Ofgem to help shape the regulatory framework and expects the consumer protection regulations to closely match its existing Scheme Rules, which are themselves modelled on consumer protections in the gas and electricity sector.

The Government (BEIS) has said: “We want the Heat Trust voluntary scheme to have an important role in preparing the industry as we move towards regulating the market, and we strongly encourage heat networks to register with the scheme now to prepare for regulation.”

Heat Trust also welcomes that statutory regulation will go beyond areas covered by Heat Trust Scheme Rules, to include matters such as heat pricing and technical standards, which will further protect consumers.

The Bill includes the power to set a domestic heat network price cap, although the Government says that Ofgem will not initially set a price cap, but instead intervene where it considers heat prices are “disproportionate”. High heat prices are often driven by high inefficiencies and heat losses due to poorly performing networks and so regulation of prices and of technical standards are closely linked.

The regulation of technical standards should deliver improved efficiency of heat networks, to keep heat costs down for consumers, as well as improved reliability, to deliver a better overall consumer experience.

The details of regulations will be set out in future secondary legislation, which will be subject to consultation, and Heat Trust will respond to these consultations with detailed comments when they arise.

In the meantime, Heat Trust is committed to working with industry and government to ensure a smooth transition to regulation and to making sure consumers remain central to that journey.

Ahead of the second reading of the Energy Bill on 19th July, Stephen Knight, Director of Heat Trust, said:

“Heat Trust supports the government’s commitment to regulating heat networks, which will bring greater consumer protection to the sector. This long-awaited Energy Bill is the first step in this process.

“Sadly, in the absence of such regulation, not all heat network customers are currently receiving a good service, with too frequent supply interruptions, and in recent months many have seen enormous, uncapped price rises.

“At Heat Trust, we work with operators who are committed to providing a good service and hold them to meeting minimum service standards, but sadly too few operators are registered with our scheme.  Those that are registered will be uniquely prepared for regulations when they come into force and I encourage others to contact us about registration so that more can become regulation-ready over the coming months.

“We are looking forward to helping government and Ofgem to deliver a set of regulations that can deliver real improvements for all heat network customers. In the meantime, we will continue to work with district and communal heat network operators and the government to prepare the sector for regulation.”