Ombudsman: Sector needs to build consumer trust around heat networks

The energy sector needs to tackle consumer distrust in heat networks, the chief executive of the Energy Ombudsman has said.

Matthew Vickers was speaking at a Westminster Energy, Environment and Transport Forum seminar on heat networks, which discussed investment, infrastructure and developing and regulating the market.

Specifically he said the sector must take a much more joined-up approach between the technical issues involving heat networks and the customer journey, adding consumer trust was essential.

Heat networks provide homes with heat and hot water from a central source via insulated pipes, but unlike other energy services are not currently regulated. Furthermore, there are no sector specific protections for heat network consumers, unlike for people on other utilities.

Work however is underway to bring heat networks under energy regulator Ofgem’s remit, with a recent consultation from the department for business, energy and industrial strategy (BEIS) outlining a regulatory framework giving Ofgem oversight and enforcement powers across quality of service and pricing arrangements for all domestic heat network consumers.

The Ombudsman chief said that customers are being asked to deal with new products and services in very different ways than they have previously, and with that brings risks and fears, making the process a “trust challenge”.

Vickers warned that the customers have somewhere “got a bit lost” as much of the focus so far has been around the technical codes of practice.

“One of the things that we have got to watch as we start talking about codes is, they are really helpful for building up a community within ourselves, for building up those points about interoperability, common language, processes and procedures and all of those matter, all are necessary. The risk is as we create one community that becomes more technical and more complex, in the process we end up excluding another, we end up excluding the consumers who we are here to serve.”

Vickers used an analogy from the 2006 film Snakes on a Plane in which he likened the passengers to energy customers and flying the plane to the technical challenges faced in designing, building and operating heat networks. He warned the sector must protect consumers against the “trust snakes”, which represent uncertainty with heat networks such as the lack of a price cap or ability to switch.

“My concern is that I think we do quite a lot of flying the plane and not enough of thinking about the snakes, thinking about the trust, thinking about how we deal with that human side of what we are doing”, he added.

He continued: “When we look at heat networks from 30,000 feet it’s the same challenges we have got right across the energy sector, and indeed across many utilities or infrastructure, it’s that challenge of infrastructure and people.

“The second point is to recognise that getting to a low-carbon economy is a huge economic, social, environmental opportunity if not necessity, and a low carbon economy is going to have to be a high trust one.

“So what does that mean? We have got an opportunity, let’s not just drag and drop some of the things that we have done in other sectors and try and put that into heat networks because it is not going to work. We need to think about how we join this up as a proper system so that we have codes, regulation and redress all playing a part in something that is much more flexible, based around fairness, based around risk and outcomes, that’s all about breaking some of those windows, joining the thing up and remembering that it’s the passengers on the plane who matter.”

According to the latest report from consumer body Heat Trust complaints regarding heat networks fell by 54 per cent last year.

The latest figures show an average of 4.72 complaints per 100 customers in 2019 down from 12.9 per 100 customers the previous year. There was also a drop in the number of complaints referred to the Energy Ombudsman – although of all complaints made to the Ombudsman only 9 per cent were not upheld.