CMA concludes that Heat Networks must be regulated
Yesterday, the Competition and Markets Authority (CMA) published the final report of its 7-month study, concluding that Heat Networks should be regulated to protect UK customers.
Heat Networks currently provide approximately 2% of building’s heat demand, with 14,000 Heat Networks across the UK. To meet carbon targets, the Committee on Climate Change estimates that approximately 18% of heat will need to be generated by Heat Networks come 2050.
The CMA has concluded that for the majority, Heat Networks offer prices that are equal to or lower than the typical gas or electricity tariff, however privately owned or rented consumers seem to be paying more for heat through a Heat Network.
Therefore, the CMA have advised that Heat Networks must be regulated, suggesting that Ofgem is “well placed” for the position.
Once established, the regulator is recommended to:
- Introduce the same level of protection for Heat Network customers as those on a gas and electricity tariff
- Increase transparency so that residents are aware they are on a Heat Network, and clear agreements between customers and Heat Network Operators
- Ensure customer awareness of what they are being charged for heat
- Prevent developers from using cheap options in order to meet planning regulations, resulting in poorly designed, built and operated systems
The CMA has also issued an open letter to existing Heat Network Suppliers and Operators, outlining obligations under consumer and competition law, and recommendations to ensure compliance.