Welcome to our Summer Heat Trust update for 2020. It covers updates from both Heat Trust and the wider heat network and customer protection fields. We hope that you find it informative and useful, and welcome any feedback. 

Read Summer Update 2020

Heat Trust has responded to the Department of Business, Energy and Industrial Strategy (BEIS) consultation on building a market framework for heat networks. Heat Trust welcomed the consultation and supports the decision to appoint a sector regulator. Statutory regulation is a key step to ensuring customer protection for all heat network customers.

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.

Transparency, pricing and quality of service standards are key elements of the protection regime customers need. Other important aspects include access to independent redress and enforcement powers - with which heat networks can be held accountable to.

Heat Trust already sets minimum standards in many of these areas and can help suppliers prepare for the transition to regulation. We also look forward to building on our learnings and experience with government to help inform new regulation.

Heat Trust’s full response to the consultation can be found here.

Audit updates and Compliance proposal

Heat Trust are proposing several updates to its audit processes and some new compliance processes. Click below for a link to the full modification proposal, summary of consultation responses and supporting DRAFT new Audit Guidelines. Full individual responses to the consultation are available on request.

MOD022 Audit and Compliance Proposal
Consultation responses
Draft Audit Guidelines

 

Modifications being revisited

The below modifications are being progressed in the summber of 2022:

 

Updating Scheme Rules relating to metering, billing and GSP

The second stage of strategic Scheme Rules review related to metering, billing and Guaranteed Service Payments, which was undertaken in 2021. Most of the metering and billing related modifications have now been implemented and can be found on the Scheme Modifications page. Those related to Guaranteed Service Payments, below, are being revisited in a series of Roundtables over summer 2022.

 

Modifications which were not approved

MOD010 - MOD012 - Modifications to the Scheme Rules relating to vulnerable customers  
The first stage of strategic Scheme Rules Review related to customers in vulnerable situations. Some modification proposals were approved and can be found in Scheme Modifications. The modification proposals which were not approved can be found below:

Both UK and Scottish Governments have published proposals to regulate the heat networks market.

UK

Heat Trust welcomes and supports government’s confirmation that it will introduce regulation for heat networks, with a sector regulator to provide oversight and enforcement.

Statutory regulation is vital to building customer trust in heat networks, allowing the market to continue to grow and deliver the benefits of sustainable heat more widely. This is particularly important in a market of natural monopolies where customers cannot switch their supplier.

We at Heat Trust have unsurpassed collective knowledge of this complex, fledgling industry and have been putting in place the foundations of the bespoke, robust regulations that protect customers while allowing the heat networks market to flourish in the future. This is an essential part of the sector’s development – but just the first step. Customer protection need not and should not wait whilst a new regulatory framework is developed. We believe all heat networks should be required to meet our standards before regulation is in place. The recent BEIS consultation stated that “By joining 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.” We support the move to statutory regulation and are committed to supporting the sector with the transition.

The proposals would create a statutory regulator for the heat network sector, proposed to be Ofgem, and focus on three core areas:

  • Transparency of the heat network service, including before first joining the network;
  • Fair and accurate pricing; and
  • Quality of service - for example expectations on outage management and customer complaints handling.

 

Scotland

The Scottish Government introduced the Heat Networks (Scotland) Act to Parliament on 2nd March 2020 and was passed on 23rd February 2021. The Act will require heat network suppliers to apply for a licence to supply heat via a heat network, similar to how gas or electricity suppliers operate, and a consenting process for constructing or operating heat networks in Scotland, similar to planning permission. The Act also contains proposals to give local authorities the power to designate heat network zones, and to introduce a transfer scheme should a supplier cease to operate (similar to the Supplier of Last Resort scheme for gas or electricity customers). These are intended to commence by the end of 2023.

Heat Trust, the consumer champion for heat networks, has appointed a new Director.

David Watson takes up his new role on 1 June, replacing previous Director Bindi Patel.

David comes to Heat Trust from Centrica, where he was Director of Group Strategy. Prior to this role, he was Head of Market Design and New Energy for British Gas, with responsibilities including leading low carbon policy development within the GB and EU retail market. He said:

"I am delighted to be joining Heat Trust at what is a very important time for both the organisation and the wider sector. Membership is growing and customer service standards continue to rise across the sector. 
Up to five million homes could be reliant on the heat network infrastructure by 2050.  Consumer interests need to be absolutely at the heart of this growth and I look forward to building on the fantastic work that has been achieved over the past five years.”

Ms Patel has been at Heat Trust since it was launched in 2015. During this time, she has overseen Heat Trust’s coverage expand to more than 10% of the market with 80 heat networks registered serving over 50,000 homes and micro-businesses. Heat Trust’s work has been recognised by the Government and has become a recognised industry standard. She said:

“I am proud of the work we have achieved in championing consumer protection in a sector that will grow ever-important as the UK works towards net-zero carbon targets. Over the last five years Heat Trust has worked to deliver benefits for customers through the standards it sets, which suppliers strive to meet for the good of the industry. I am delighted to have contributed to that and look forward to seeing Heat Trust grow further.” 

Casey Cole, chairperson of Heat Trust, welcomed David to the team and wished Ms Patel well in her future role. He said:

“We are delighted by the success of Heat Trust, and we would like to thank Bindi for her leadership and dedication to the scheme’s success over the past five years. We wish her every success in her new position. David has a proven track record that will see Heat Trust go from strength to strength and we look forward to moving forward under his leadership.”

ENDS