Understanding Heat Networks: Protecting Consumers in a Growing Market

Heat networks supply warmth to homes from a centralised source, serving about 3% of UK households, including Arjun*, a resident in housing association accommodation. Earlier this year, Arjun received a staggering £5,000 heating bill covering two to three years, with threats of court action for non-payment. The bill lacked transparency, showing no breakdown of usage, charges, or fees, and upon inquiry, he was told to prove payments back to 2017. The lack of clear communication left him feeling anxious and distrustful of his housing association and management agency.

Unfortunately, Arjun’s experience is not an isolated one. Citizens Advice has heard from clients facing unexpected heating costs, retrospective bills, and severe consequences for non-payment, including eviction. Some media reports have shown price hikes of up to 450%, with bills 60% above the Ofgem price cap.

Why Heat Networks Are Important

While heat networks are considered an efficient way to deliver energy, they fall short of the consumer protections found in regulated energy markets. These protections include price caps, clear billing, and support for those facing financial hardship — all crucial safeguards that heat network consumers currently lack. This absence of protection is even more concerning because consumers can’t switch suppliers if their current provider fails to meet standards.

A Path to Regulation

Since 2017, Citizens Advice has been calling for regulatory oversight of heat networks, a recommendation echoed by the Competition and Markets Authority in 2018. The government recently committed to giving Ofgem regulatory authority over heat networks, with Citizens Advice designated as the consumer advocate for these services in England and Wales.

Citizens Advice’s Three-Part Mission to Support Heat Network Consumers

1. Building a Clear Understanding of Consumer Experiences

   • Citizens Advice is conducting in-depth research into the experiences of heat network consumers, focusing particularly on vulnerable and marginalised groups. With outdated data on heat networks, it’s critical to understand the real impacts of rising energy costs on these consumers.

2. Advocating for Comprehensive Consumer Protections

   • Citizens Advice aims to ensure new regulations match or exceed the protections in gas and electricity markets. By advocating for strong consumer protections and collaborating with stakeholders, we can establish standards that work for both consumers and the industry. Past successes, like helping secure the energy price cap, demonstrate our commitment to consumer interests.

3. Providing Advice and Direct Support to Consumers

   • Citizens Advice will offer telephone and digital advice to heat network consumers across England and Wales, similar to existing support in the gas and electricity sectors. Vulnerable consumers will receive enhanced support, and insights from these services will help shape ongoing policy improvements.

Looking Forward: A People’s Champion for Heat Networks

With regulatory changes underway, Citizens Advice is committed to working closely with government, industry, and advocacy groups to create a fair, accessible, and transparent heat network market. We will track the impact of these changes, advocating for continued improvements and ensuring that consumer needs remain front and centre.

For further details or to join the conversation, contact us at heatnetworks@citizensadvice.org.uk. Together, we can build a market that prioritises people, not just profits.