Energy crisis having ‘disproportional impact’ on heat network customers

Despite claims by the government that heat network customers will receive “equivalent” support to other billpayers this winter, they still face a doubling in costs, the chief executive of the Heat Trust has told Utility Week.

Prime minister Liz Truss promised comparable protection for heat network customers along with others not covered by Ofgem’s price cap as part of the Energy Price Guarantee.

However, it later emerged that these customers would be covered by the same measures extended to businesses, meaning unit prices capped at a higher level and protections only guaranteed for six months rather than two years.

Stephen Knight, who leads the consumer body for heat networks, told Utility Week: “The support is welcome but it is not equivalent to what has been set out for other domestic customers. Heat network customers will pay twice as much for their heat this winter as other customers and some will face a quite desperate situation.”

Knight said the challenges faced by heat network customers were compounded by a lack of mandatory technical standards across the sector, which mean many networks are “extremely inefficient”.

In its annual report published this week, the Heat Trust estimates heat networks are only delivering 35%-45% efficiencies, adding to the costs for consumers. Knight explained this was generally a result of poor maintenance or systems “set up badly” that are being unnecessarily overworked.

The government has pledged to launch a £30 million heat network efficiency scheme next Spring but the Heat Trust is calling for this to be brought forward and for the funding to be increased.

Knight also urged the government to re-confirm its commitment to introducing regulation of heat networks. This was promised in the Energy Bill earlier this year but Knight said: “We have some concerns around reports that the Energy Bill could be scrapped and what that means for the commitment to regulating heat networks. We need clarity from government on that point.”

There are currently 109 heat networks registered with the Heat Trust, equating to 65,000 residents. However, Knight pointed out this is still only a fraction of the 500,00 plus heat network customers across the country. Many of these are part of hyper-local schemes, with the national average of 30 residents covered by each network.

The data in the trust’s annual report shows that even the larger operators that make up its registrants have struggled to maintain adequate standards.

In 2021, there were 4,875 unplanned interruptions, double the previous year’s tally, although 83% of these were issues within individual properties. Some 808 were interruptions due to problems with the heat generation (423) or distribution (385) and likely affected multiple properties. This figure was up from 505 instances in 2020.

The trust’s research indicates a typical customer experienced about six unplanned interruptions in 2021, lasting an average of five to six hours.

Knight also expressed concern about a rising number of supply suspensions towards the end of last year. This is despite an industry agreement which ran from May 2020 to October 2021 to support vulnerable customers.

Knight: “This implied that disconnections would be discouraged and the figures show that this was indeed the case during the pandemic but that suspensions have increased since then.”

He added: “We are also seeing a rise in pre-payment meters, which again is a worry and something we would want to discourage. While there are far fewer pre-payment meters in heat networks than domestic gas customers, we are now seeing a trend of smart meters being switched to pre-payment.

“This is another example of why heat networks must be regulated – so that the industry is working to a standard set of rules.”