The UK competition authority has declared that heating networks ‘must be regulated’ and that its fellow watchdog OFGEM ‘is well placed to take on the role.
The Competition and Markets Authority (CMA) published the final findings of its seven-month study into this industry which set out to establish whether heat network customers are getting the right level of protection.
Heat networks provide homes with heat and hot water from a central source via insulated pipes, but unlike other energy services are currently not regulated. As a result, heat network customers in general have less consumer protection if things go wrong.
The CMA found many heat networks offer prices that are the same or lower than those paid by people on gas or electricity, and customers receive comparable levels of service.
However, a number of those on privately operated networks are getting poorer deals in terms of price and service quality, and there is a risk this problem could grow.
There are currently about 450,000 customers of these services, and that number is expected to grow significantly as investment in energy efficient technology increases.
The CMA is therefore recommending that the regulator once it is established:
- 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 and;
- 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.
Independently, Citizens Advice Scotland last year urged the Scot-Govt to regulate district heating networks.**
Competition authority chief executive Andrea Coscelli, said: “With 14,000 heat networks supplying 450,000 people with heating across the UK, they can be an efficient and environmentally-friendly way for people to heat their homes.
“But there are problems with how some operate, especially for those in private housing. People must benefit from the same level of protection as those using gas or electricity, and not be penalised either by paying too much or receiving a poor-quality service.
“There is currently no regulator for this part of the energy sector – we think that is one of the key problems to be addressed and we recommend OFGEM is given this role.”
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