Hidden debt, hidden risks: Fixing the two-tier system for heat network consumers with bundled charges
There’s a two-tier system of protections for people who pay for their heating within rent or service charges. This is called ‘bundling’ or ‘bundled charging’. It affects a third of heat network consumers. Today, that’s more than 360,000 people. But, by 2050, bundled charges could affect 1.2 million people if the sector grows as planned and nothing is done to fix the two-tier system and improve heat network infrastructure.
Bundling puts people at risk of losing their home if they fall behind on their bills. It creates double standards in billing and back-billing and a serious loophole in fair pricing rules. Bundling can make it harder to hold suppliers accountable too.
Half of bundled consumers receive no bill, account summary, or statement detailing what they pay for heating and hot water, compared to just 1 in 10 who pay separately.
7 in 10 people with bundled charges do not know the amount of their last heating payment.
6 in 10 bundled consumers do not know what type of tariff they are on.
1 in 7 heat network consumers with bundled costs are excluded from Ofgem’s new billing, back-billing, and pricing protections.
1 in 7 heat network consumers who are in debt have experienced extreme forms of debt management, including eviction, threats of eviction, forfeiture orders and other court orders.
We’ve carried out legal research, quantitative and qualitative research with consumers, and extensive engagement with heat network providers in the social housing sector, to understand more about bundled charges. From this, we’ve developed practical recommendations to address the two-tier system of protections.
To prevent eviction and forfeiture for heating debt, the Social Housing Regulator should give social tenants in England the same protections against debt-driven evictions that already exist in Wales. Courts should have greater oversight of private tenants facing eviction for heating debt and forfeiture should be abolished.
To improve transparency and accountability, the Ministry for Housing, Communities and Local Government should progress proposals for regulation of managing agents and improved service charge processes and Ofgem should set deadlines for providing missing contract information.
To prevent long-term back-bills and retrospective pricing, Ofgem should make sure the companies that supply heat networks with energy are upholding the non-domestic Standards of Conduct on billing.
To make sure fewer people face bundled charges in future and have more control over their bills, the Department for Energy Security and Net Zero must progress proposals for the roll-out of individual metering. Ofgem must also ensure the expectation they’ve set in guidance - for individual metering to result in separate charging - is met by suppliers.
The report draws on legal research commissioned by Citizens Advice and carried out by Sharpe Pritchard LLP. Read the legal report here 1.04 MB . The findings of the quantitative and qualitative research will be published separately at a later date.