Government to extend price cap to heat networks

The government has announced that protection against sky-rocketing energy bills will be extended to domestic customers of heat networks in areas designated for roll out of the communal systems.

Customers of heat networks, who number around half a million, do not currently enjoy protection under the retail price cap for their heating bills.

Ofgem classifies supply to heat networks as a commercial, not domestic, arrangement, meaning their customers do not benefit from the price cap.

The Heat Trust recently wrote to business and energy secretary Kwasi Kwarteng warning that heat network customers face “huge and unrestricted” increases in their heating and power bills because they have been exposed to the full brunt of recent hikes in energy costs.

In a document, published on Friday 17 June), the Department for Business, Energy and Industrial Strategy (BEIS) outlined the feedback to a consultation carried out last autumn into its proposals for creating new heat network zones.

Respondents to the consultation said pricing protections should be extended to both domestic and non-domestic heat network consumers.

The document said the government intends to extend pricing protections to all consumers within zones who are required to connect to a network.

The paper said feedback to the consultation showed the risk of consumer detriment also extends wider than pricing to other areas such as quality of service standards.

The response also confirmed that the government is pressing ahead with a requirement for heat sources within designated zones to connect to heat networks, with powers due to be brought forward in upcoming primary legislation.

The document said BEIS will give itself reserve powers to appoint co-ordinators for the new zones where local authorities are unable or unwilling to do so.

The government sees the zones as a key mechanism for encouraging the expansion of the networks to nearly one-fifth of households by 2050 – up from just 2% currently.