3 ways Citizens Advice will be a strong people’s champion for heat networks
Arjun* lives alone in a flat run by a housing association. He’s one of approximately 3% of the population served by a heat network. Heat networks supply heat from a central source to consumers through a network of pipes, meaning that homes like Arjun’s don’t have a central boiler.
Earlier this year Arjun received a shock £5,000 bill from his housing trust covering 2–3 years, and was threatened with court action if he didn’t pay. The debt came as a surprise to him and he suspected that the management agency hadn’t been communicating heating and hot water costs accurately to tenants.
His bill didn’t have any breakdown of his usage, standing charges, additional service charges, late payment or admin fees. When Arjun asked for a full breakdown, he was first asked to provide proof of every payment going back to 2017 because the local authority didn’t have access to his payment history. Arjun was extremely anxious about how he would afford to pay if he couldn’t prove that payments had already been made. This experience left him distrusting of the management agent and the housing trust.
Arjun’s story isn’t a one off
While we know that many people on heat networks are satisfied with the service they receive, we’ve heard really worrying stories from our frontline Local Citizens Advice about the impact of high costs of some heat networks on consumers. At the same time the media has picked up on some cases involving 450% price increases, £1,000s worth of retrospective billing, bills 60% higher than the Ofgem price cap and threats of eviction when consumers aren’t able to pay.
Heat networks are generally considered efficient ways of delivering heat, as they benefit from large scale heat generation and can use waste heat resources. They’re a key part of the government’s plan to decarbonise heating and there’s a target for heat networks to supply a fifth of heat by 2050. When they’re working well, they should be an efficient and cost-effective source of heating and hot water.
However, protections for heat network consumers fall far short of those found in other essential markets, including mains gas and electricity. For example, households are not protected by the price cap or from catch-up billing. And there are no requirements for heat networks to treat consumers fairly when they have payment difficulties.
These protection gaps are particularly worrying as heat network consumers can’t shop around and switch their supplier, or easily change to a different heat source.
Regulation is on the horizon
We’ve been advocating for the sector to be regulated since 2017 — a call that was echoed by the Competition and Markets Authority in 2018. In December 2021 the government agreed and committed to giving the gas and electricity regulator, Ofgem, the powers to regulate heat networks.
The government also announced that Citizens Advice will be the statutory consumer advocate and advice provider for heat network consumers in England and Wales. We’ve been performing this role in the gas, electricity and post markets since 2014.
3 ways we’ll champion consumer rights
The coming months will be pivotal in shaping the experience of heat network consumers now and for generations to come. Ensuring that heat network consumers get outcomes equivalent to, or better, than those for mains gas and electricity is vital if heat networks are going to play a bigger role in ensuring we meet our net zero ambitions.
Here’s how we plan to be a strong people’s champion for heat networks:
1. Building a detailed picture of the consumer experience of heat networks
We’ve been reviewing the existing evidence on consumer experiences of heat networks and talking to stakeholders to get their take on areas we should be focussing on. As part of this process, we’ve identified significant gaps. For example, the Government’s most recent research on heat network consumers was carried out before the spike in global gas prices in 2022 and didn’t capture the impact of this seismic shift in the market.
That’s why we’re commissioning in-depth research with consumers of heat networks to understand their experience and identify issues. We’re particularly interested in understanding the experiences, and championing the interests, of consumers in vulnerable circumstances and from marginalised groups.
2. Ensuring that the new regulatory framework delivers strong consumer protections
Our top priority will be ensuring that consumer interests are placed at the heart of the new regulatory framework.
We have a strong track record of being influential in the energy market. In 2023 our report highlighted the urgent need to improve outcomes for consumers facing energy debt. This helped lead to a temporary ban on involuntary installation of prepayment meters, and the introduction of permanent stronger protections for consumers.
We’re also an influential voice on the technical aspects of the sector — offering a counter-balance to well resourced industry voices. We identified that the Energy Price Cap was applying some data that was only relevant for non-prepayment consumers to all consumers. Ofgem then amended its methodology leading to a reduction in the cap. The savings to households from this single intervention were more than what it costs for us to act as a statutory advocate for 30 years.
We’ll approach this in the same way we have in the other essential sectors we work in — working openly and collaboratively with Ofgem, DESNZ, industry and other stakeholders. Where possible we’ll work to build consensus, but we won’t hesitate to robustly champion the interests of consumers where necessary.
We recognise that the upcoming regulatory changes represent a significant shift for industry and Ofgem. Citizens Advice are committed to supporting this transition through open dialogue and collaboration. This will include engaging in public awareness campaigns, parliamentary drop-ins, attending and arranging stakeholder events and targeted one to one meetings with decision makers.
We’ll also work with key trade associations like the Association of Decentralised Energy, as we have successfully with Energy UK, including to design voluntary commitments which set out standards for gas and electricity suppliers when engaging with vulnerable consumers. These relationships help build a deeper understanding of how the market works and ensure we develop recommendations that are workable and deliver the biggest impact for consumers. Our past success in working with Energy UK to design voluntary commitments is just one example of our commitment to working collaboratively to find solutions which work for both consumers and industry wherever possible.
3. Establishing advice services which provide direct support to consumers and help to drive up standards across the market
As part of our new role we’ll be setting up new advice services for heat network consumers in England and Wales. These services will be similar to those available to gas and electricity customers. All heat network consumers will be able to access telephone and digital advice on their rights and how to go about resolving a problem. More intensive support will be available to consumers in vulnerable circumstances with a particularly urgent and severe problem.
By combining insights from our new research with feedback from our frontline advice services, we’ll get a more comprehensive understanding of the challenges consumers face.
We’ll regularly share these insights, anonymised to protect people’s privacy, with Ofgem, government and industry to promote good practice, shine a spotlight on harmful practices, and help build a fair market for all heat network consumers.
Once regulation is introduced, we’ll track the impact of policies on the people that come to us to understand if firms are following the rules, and if the regulations are achieving their intended outcome.
Overall our mission is clear: to be a strong and effective people’s champion in the heat networks market. We’ll need to work with a wide range of stakeholders in order to achieve this ambition. Please get in touch at heatnetworks@citizensadvice.org.uk to learn more about our new role, help shape our plans and find ways we can collaborate.
*Name has been changed
