Some 500,000 heat network customers across England, Scotland, and Wales will receive new safeguards against excessive energy price increases from tomorrow as Ofgem assumes regulatory oversight of the sector for the first time.
The move from the energy regulator brings an end to years without formal protection for households and businesses relying on these centralised heating systems.
Until now, the industry has operated outside the regulator’s jurisdiction, leaving customers vulnerable to dramatic cost increases.
Some heat network users have experienced price surges reaching as high as 450 per cent in the wake of rising gas costs.
The UK’s energy regulator has unveiled new support for heat network customers
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The new regulatory framework, taking effect on 27 January, aims to bring these customers’ protections closer to those enjoyed by people on conventional gas and electricity supplies.
Heat networks function by distributing warmth from a central source, such as surplus energy from data centres or industrial facilities, to multiple connected buildings via underground pipes.
Under the new rules, Ofgem gains authority to intervene when operators impose unjustified price rises or fail to maintain adequate service standards. Customers experiencing supply interruptions will now be entitled to compensation, while bills must be presented in a clearer, itemised format.
Enhanced energy bill support for vulnerable households also forms part of the regulatory package, according to the Department for Energy Security and Net Zero (DESNZ).
Ofgem regularly changes the energy price cap every quarter | GETTY
Minister for energy consumers Martin McCluskey said: “For too long customers on heat networks have been unprotected, being hit with unfair price rises and having to manage with hugely inconvenient service outages.”
He added that support is already available through the Energy Ombudsman for those with ongoing complaints.
Helena Charlton, the director of heat networks at Ofgem, said: “Ofgem is committed to putting consumers first, and the beginning of heat network regulation marks an important step towards better protections.”
She emphasised that customers would benefit from stronger safeguards around billing, complaints handling and assistance for those in vulnerable circumstances.
While acknowledging that heat networks can provide efficient, affordable heating, Charlton noted this is not always the case, making regulatory standards essential.
Simon Francis, the co-ordinator of the End Fuel Poverty Coalition, said: “Bringing heat networks under Ofgem regulation is an important and long-overdue step.”
He warned that regulation alone would not resolve all issues, urging Ofgem and ministers to deploy these powers robustly to ensure vulnerable households receive genuine protection and affordable, reliable heating.
Gillian Cooper, the director of energy at Citizens Advice, said: “New protections for people who rely on heat networks are a pivotal moment.”
“Energy Owls” actively manage their energy usage, check tariffs, and track their bills. | Uswitch
She noted that heat network users have long faced fewer safeguards than those on traditional gas or electricity supplies, with Citizens Advice now serving as the official advocate for these consumers in England and Wales.
Dhara Vyas, chief executive of Energy UK, highlighted that the warm homes plan published last week set an ambitious target of doubling heat network capacity over the coming decade.
The Labour Government has also committed more than £47million through the Green Heat Network Fund for four new projects in Waterloo, Hounslow, Sunderland, and Media City in Salford.
The Waterloo scheme will harness heat from the River Thames, while Media City will utilise wastewater source heat pumps.