Not far, or fast enough. Heat networks must do more to prepare for regulation and deliver for consumers

You may have heard the announcement of the long-awaited Energy Bill in the Queen’s Speech last week. This bill will give Ofgem, the energy regulator, the power to regulate heat networks and will make Citizens Advice the statutory consumer advocate. We welcome this announcement as heat network customers have been unprotected for too long, with our recent research revealing that while customer service has been improving, progress has not been fast enough. But that’s not all heat network customers need. As the cost of living crisis deepens and energy prices continue to soar, Government may need to consider extra support for heat network customers before official regulation kicks in 2023.

Heat networks deliver heat directly to consumers

Around 500,000 consumers currently receive heat into their homes via heat networks. Heat networks are systems where consumers receive hot water from a central source outside the home via a network of pipes. This means consumers in areas with heat networks don’t need boilers for their central heating or hot water. But, there are downsides. Heat networks are currently unregulated so there are no price controls. And, when you’re connected to a heat network you can’t change energy provider, meaning you can’t shop around for a better deal. This is why regulation is vitally important. When consumers are tied into services from a particular provider it’s vital that costs are affordable, the service is reliable, and the customer service standards are high.

Our research has found that their customer service often isn’t good enough

In 2021 we published research highlighting a number of issues with the information and support provided by heat networks to their customers. The report made recommendations to suppliers on how to improve their processes and we also published a good practice guide to help heat networks improve their processes and better support their customers. This year, we repeated the research to find out if supplier performance had improved.

Disappointingly, our new research shows that whilst suppliers have made some improvements in the last year, the pace of change has not been quick enough.

Worryingly our research found that many heat network suppliers were not able to answer basic information regarding contracts and pricing. Only 2 in 5 suppliers were able to correctly tell shoppers that you can’t change suppliers after moving into a house connected to a heat network. And only 1 in 4 suppliers via telephone could tell shoppers whether they expected prices to rise as a result of wholesale gas increases.

Regulation will require suppliers to provide significantly better information and support to consumers. Our research indicates that many heat networks aren’t ready to provide the expected levels of service. You can find a detailed report of our findings on our website as well as the improvements we expect suppliers to make in the coming months to ensure they can support their customers throughout the cost of living crisis and beyond.

Regulation will help to solve these challenges, but when?

While regulation should eventually help resolve the issues raised by our research, it will take some time for this to be fully in place. Heat network customers are currently a captive audience and deserve information and support now.

We are therefore calling on heat networks to not wait for regulation, but to start improving their processes now to start providing better support to their customers. And we are reiterating our call on the government to put in place both broad and targeted support to mitigate the impact of price hikes for consumers to help ease the impact of the current cost of living crisis.