In 2025 all communal heating will be regulated by Ofgem.  This will mean that housing providers will be treated in the same way as energy companies such as British Gas and SSE. This is a big change. So how is the sector doing on getting ready for this? We asked housing providers across the country and the results are in.

We surveyed 32 housing providers with a total of just over 70,000 properties on heat networks, and with heat network portfolios ranging from 3 to 15,000 homes. Typically homes on heat networks represented 9% of their overall housing portfolio, very much in line with what we find across the sector. The average cost of running a heat network portfolio was £2.6m.

The findings give a fascinating insight into heat network regulation, the challenges the sector is experiencing and how it can respond to those challenges.

Current regulation

The Heat Network Metering and Billing Regulations (HNMBR) came into force in 2014 and focused on the cost effectiveness assessment of installing meters, their installation and ongoing management.

The analysis found that only 50% of housing providers are fully meeting the existing regulations. The largest issues were not completing a cost-effectiveness assessment on unmetered schemes and oversight of metering equipment performance.

The current metering and billing regulations will become part of the new full regulations.  DESNZ has indicated that they will want to see far more individual meters being installed so it’s vital that those assessments are carried out to remain compliant and to have a clear picture of what will be needed.

Full Regulation 2025

The new regulations will provide the same levels of consumer protection to those living on heat networks as there is for those who have more conventional utility arrangements. Heat networks are a natural monopoly with consumers not able to change supplier which underlines the need for robust, clear and effective consumer protection.

Our analysis shows that:

• Nearly 70% of housing providers are not ready for upcoming regulation compliance.
• Only 41% have data on heat network debt
• Less than a quarter have the right policies in place (23%) or a comprehensive communications plan (also 23%)
• Only 9% currently undertake any satisfaction surveys amongst heat network customers

How can you get regulation ready?

Many in the sector are now putting in place the plans to meet the new regulations but our findings underline the work that needs to be done in order to stay on the right side of compliance. The regulation clock is ticking.

We recently posted about the Government’s response to the consumer protection consultation, which is one element of standards: we expect to see the technical standards consultation in Autumn 2024.

If you want to take that critical first step to find out how your organisation is doing on current and future regulations you can get your free  Regulation and Compliance Insights Report here.

We will, of course, keep you updated as regulation continues to develop! Keep your eyes peeled on our website, and our LinkedIn for key updates.

For any other queries, whether regulation focused or otherwise, please contact us at [email protected].