Consumer interests must be protected while growing the heat network sector
Consumer protection should be the driving principle behind the regulations governing heat networks, say the Gas Users Organisation.
In the UK, some 85% of households heat their homes with an individual connection to the gas network.
The government is seeking to move more households onto “heat networks” where heat is delivered through a pipe into the home from a central point; and compulsion is being contemplated through local authority planning regulations to force customers to connect to heating networks.
Although district heating is common in countries like the Netherlands, Denmark and Finland, the penetration of district heating has been less pronounced in countries like the UK who have a liberalised energy market, such that domestic heating is seen as a commodity that is purchased by a consumer who exercises choice, rather than a service that is provided to a citizen.
Gas customers currently enjoy the benefit of a reliable and high-quality energy supply, that is clean, convenient and cheap, and they exercise choice over supplier.
We appreciate that many heat networks service high rise buildings that do not benefit from individual gas connections, but we are concerned that the proposed growth of the heat network sector will include many dwellings where the householders may be better served by an individual gas boiler,
We are concerned that many heat network customers currently experience poor service, and that a significant minority are charged high prices.
As heat networks decarbonise they are likely to become more expensive for their customers, and given that a high proportion of heat network customers are vulnerable or in financially precarious circumstances, then this could contribute to fuel poverty and inequality.
The Gas Users Organisation has submitted our views to a government consultation about how heat networks should be regulated. We believe that the objectives of regulation should be guided by the following principles:
Consumer protection, including pricing, should be no weaker than for customers of the gas network.
Heat network customers should pay no more than customers with individual gas boilers.
The structural problems of the dysfunctional market need to be addressed, to remove systemic factors that contribute to poor performance.
Decarbonisation outcomes should be analysed and substantiated before compulsion is used to force people to connect to networks.
Where networks receive public support, not only should they adhere to mandatory technical standards, but their decarbonisation targets should be analysed and substantiated.