Citizens Advice response to Ofgem’s heat networks regulation: Fair pricing protections consultation

Citizens Advice response to Ofgem's fair pricing consultation 414 KB

Citizens Advice welcomes the opportunity to reply to Ofgem’s consultation on fair price protections for heat networks. Heat networks are natural monopolies, which means that consumers can’t switch suppliers or shop around to get a better tariff. This means price protections are even more valuable to heat network consumers than gas and electricity consumers, who usually have a choice of suppliers and tariffs.  

Like water and other forms of energy, heating is an essential-to-life utility. But unlike these other utilities, heat networks have been largely unregulated until now. The fair pricing framework must set clear expectations and Ofgem must dedicate sufficient resources to monitoring and enforcing the framework. This is crucial for fair pricing protections to be effective and to avoid repeating past mistakes, which saw the limited Heat Network (Metering and Billing) Regulations of 2014 weakly enforced.

Ofgem is developing the fair pricing framework at a time when many heat network consumers face an affordability crisis.  Our consumer research shows it’s been common for heat network bills to double or triple in the last 2 to 3 years. These increases were worsened by unfair and opaque billing practices, leading to severe financial hardship in some cases. A well-designed fair pricing framework will help to improve transparency for consumers and start to tackle unpredictability and any unfairness in prices. But government action is also needed to support consumers with targeted bill support and to fix the root causes of high pricing, including high input energy costs and, in some cases, poor heat network efficiency.

Regulation and government policy together should deliver outcomes for heat network consumers the same as or better than water, gas and electricity, through  infrastructure, supply and pricing.