The Competition and Markets Authority (CMA) has decided heat networks should be regulated, and recommended that new powers be given to Ofgem to take on the role. Extending Ofgem’s remit to include heat networks would require new primary legislation to be introduced.
CMA out the number of heat network customers at 450,000 and said the number is expected to grow significantly as investment in energy efficient technology increases. In a sector investigation it found many heat networks offer lower prices than gas or electricity, and customers receive comparable levels of service. But it said some customers get poorer deals in terms of price and service quality, and there is a risk this problem could grow, and noted that heat network customers in general have less consumer protection if things go wrong.
The CMA has recommended that the regulator :
- introduces consumer protection for all heat network customers so they get the same level of protection as customers in the gas and electricity sectors
- addresses low levels of transparency so customers know they are on a heat network and there are clear agreements or contracts between customers and heat network operators
- makes sure customers are aware of what they are paying as this is often unclear
- protects customers from poorly designed, built and operated heat networks by preventing developers from using cheaper options to meet planning regulations that end up being paid for by the customer over the longer-term.
Heat policy is devolved to the Scottish government but not to the Welsh government, while competition and consumer powers are not devolved.
Energy policy is devolved in Northern Ireland (NI). Should there be an expansion of heat networks in NI, the CMA would recommend the NI Utility Regulator and Department for the Economy and Communities to consider equivalent regulation.