Here are some key differences between heat networks and the regulated market (gas and electricity):

Heat networks

Traditional (natural)  gas/ electricity

Switch    Switching supplier

Heat networks in the UK are natural monopolies, run by a particular company, and typically have contracts that are in place for the period the customer owns or occupies the property.

Because of this, minimum customer service standards to ensure customers are supported,  particularly those in vulnerable situations is even more important for heat networks. Transparency and regulatory oversight of pricing also become more important.

Customers can switch their gas and electricity supplier. Typically gas/ electricity customers have shorter contract lengths

 

 

 

Equipment   In-property equipment

Heat network suppliers maintain the Heat Interface Unity (HIU) and meter within a customer’s property, including usually replacing it at end of life. This is usually included within the cost of the heat bill, so customers don’t need to pay for it.

This is an opportunity for more customer interaction and therefore better identification and support for vulnerable customers.

There is also an increased need for technical standards to ensure good performance.

The customer is typically responsible for replacing their boiler at the end of its life. Many customers will also arrange servicing of their boiler/heaters independently of the supplier. They will likely pay for this service. 

 

 

 

 

Charges     Standing charges

Heat network customers’ standing charge includes the maintenance and repair of HIUs as well as pipework. They are consequently higher on average than they are for gas/electricity customers.  There is also a wider variance in what is included in the fixed and variable charges between different suppliers.

Because standing charges cover fixed costs such as metering, with other costs such as boiler maintenance being picked up separately by the customer, these charges are typically lower. There is also relatively little variation from one supplier to another.

Planet     Environmental impact

By utilising economies of scale heat networks can more easily make use of low carbon sources of heat such as waste heat. Their source of fuel is also more easily and cost-effectively replaced by a lower carbon source, as there is one central energy centre.

Natural (mains) gas is a fossil fuel, which is burned to heat most of our homes and hot water but contributes to climate change. Electricity is increasingly becoming greener, however some low carbon heating that uses electricity require high levels of insulation to be efficient.

Complaint   Access to independent redress

Pending regulation, access to the Energy Ombudsman, the independent dispute resolution service for the sector, when things go wrong are limited to those customers on sites registered with Heat Trust.

All customers with gas or electricity have access to the Energy Ombudsman if complaints cannot be resolved directly with their supplier.

Size      Scale/ size

Heat network suppliers typically have a smaller number of customers than in the gas/ electricity market.  There are also far more of them, with approximately 2,300 in the market today.

Customers are often one of hundreds of thousands of customers for their supplier.

 

Protection    Regulatory protections

Only metering and billing of heat networks is currently under statutory regulation, although more wide-reaching regulation is being developed in the UK. All other aspects of assured customer protection specific to their energy supply are available only for customers on sites registered with Heat Trust.

All gas and electricity customers are protected through Ofgem’s licencing system.

 

 

Heat Trust ensures that suppliers adhere to the minimum customer protection standards set out in our Scheme. One way that assurance is provided is through an independent audit of whether suppliers are meeting these standards, something that takes place at least once for each site in every five year period. The COVID-19 pandemic has prevented this from happening for a number of sites in 2020 however.  At a recent meeting, the Heat Trust Board agreed to extend the five year deadline by one year for the sites affected.

The sites affected are: (E.ON) Greenwich Millennium Village; Romford Reflections; Waddon; Fulham Wharf; Myatts Field North; Canning Town 3; Cannon Wharf; Centenary Quay; New South Quarter; Blackwall Reach; Loampit Value; Bath Riverside; Maple Quay; St Andrews; Queensland Road; Scotswood; Barham Park; Greenwich Reach; Alie Street; Newbury Racecourse; Dalston Square; Trafalgar Place; Catford Green; West Hendon; Lincoln Plaza; Barrier Park; Enderby Wharf; and (SSE) Greenwich Square / East Greenwich; Woolwich Royal; Riverlight Heat.

The audits for each of these sites have now been replanned, and all will be completed by July 2021.

The introduction of statutory regulation will be the largest change in the sector for many years.  This will provide opportunities and risks for all parties involved in the sector.  BEIS are developing the proposals now and Heat Trust is working closely with them to share our experience of providing customer protection standards for the sector. 

It is vital that the industry understands and prepares for the changes that are coming.  In this regard, Heat Trust is partnering with Cornwall Insight to host a series of free webinars over the coming months designed to help you get the insight you need to make sense of the changes and how they will impact heat networks and the experiences of for customers.  These webinars will cover all the relevant issues under consideration, including regulatory design, compliance, costs, technical standards, investment perspectives, legal considerations, international examples and links with other policy initiatives in the space. 

Previous webinars

The links to webinars that have already taken place in this series can be found below:

Heat networks: building a market framework

2 What good looks like

A customer's perspective

A regulator's view on what is required

5 Technical standards

6 The investment perspective

International approaches

Upcoming webinars

The link to register for the next webinar can be found below:

8 Links with wider energy policy - August date TBC

9 The legal perspective - September date TBC

10 Innovation - October date TBC

In May 2020, several ADE members signed an Agreement to ensure that heat network customers were protected and supported during the Covid-19 pandemic.  Heat Trust, as the independent, not for profit, customer champion for those who live and work on heat networks agreed to provide independent monitoring of signatories’ compliance with this Agreement. 

Our first report covering the period July to September 2020 has now been published. This report, and the accompanying qualitative statements from signatories highlight both reasons for optimism and examples of good practice, but also areas of concern the ADE must now move to address. Specifically:

  • Reported levels of customer debt fell over the period; and  
  • Evidence of innovative and proactive customer engagement; yet
  • Ongoing customer disconnections;
  • Patchy levels of support; and
  • Incomplete or late submissions prevented full scrutiny.

These areas are expanded on in our response, published here.

After four years of operation Heat Trust is reviewing the Scheme Rules to keep them in line with ongoing developments in comparable markets. This will be undertaken in stages, covering the major aspects of the Heat Trust standards.

This second consultation focuses on metering, billing and Guranteed Service Payments (GSP). Feedback is sought from all interested parties. Please use the response form provided and send your responses to This email address is being protected from spambots. You need JavaScript enabled to view it.. The deadline for responses is Thursday 26th November 2020.

Please follow this link to the consultation document here

And the response form here