Coutinho calls for probe into heating market

Energy secretary Claire Coutinho has asked the Competition and Markets Authority (CMA) to carry out an investigation of the home heating market.

Coutinho said she was particularly concerned that a lack of competition within the home heating appliance market meant that customers were not always getting a fair deal.

She also implied that recent pricing decisions by gas boiler manufacturers had strongly influenced the government’s decision to delay the start of the clean heat market mechanism – AKA the boiler tax – until next year.

“Recent pricing decisions for gas boiler appliances by some manufacturers with considerable market power have called into question whether the market is working as well as it should and leading to good outcomes for consumers,” Coutinho’s letter to CMA chief executive Sarah Cardell said.

She added that ensuring there was “vigorous competition between companies in the heating market” was “more important than ever” as the UK transitions from fossil fuel to low-carbon heating.

In particular, Coutinho has asked the CMA to “assess how competition is working in the home heating appliance market and to understand whether any weakness in competition is contributing to prices being higher than they would be in a well-functioning market, or risks doing so as the sector transitions to low-carbon heating”.

In response, Cardell said an investigation into the market could take up to 18 months to complete if the CMA agrees to it.

She added that the CMA will review the request “carefully and consider potential work in this area alongside potential work in other priority markets for potential initiation during the second half of the year”.

The Department for Energy Security and Net Zero (DESNZ) announced a one-year delay to the CHMM with just weeks to go before the so-called “boiler tax” was due to come into force.

Instead, the scheme has been postponed by one year to April 2025, with industry experts warning that the move puts the government’s heat pump installation targets in “jeopardy”.

Under the scheme, which was due to come into force this month, manufacturers would have to pay a £3,000 fine for each heat pump installation that they fail to deliver, leading to the CHMM being branded a “boiler tax”.

As revealed by Utility Week, junior ministers within DESNZ threatened to resign if the scheme was abandoned because it is a key plank of the government’s efforts to decarbonise home heating, while officials worried that such a decision would leave the government open to a judicial review.