Wembley Matters has publicised the difficulties ahead for residents whose new blocks are linked to a District Heating Network. These include blocks in South Kilburn and Wembley. Because there is a single heating source for all the flats in the block the gas is counted as commercial rather than domestic and thus the cap on bills is not applicable. In addition residents do not have the option of changing their heating supplier as that can only be done by the managers of the block.
Huge bills are anticipated giving rise to great anxiety, particularly those residents of South Kilburn who are being moved from Brent Council properties with their own domestic heating to housing association blocks on District Heating Networks.
There has been next to no information on how this will affect residents although one pensioner anticipates that heating bills alone will be more than his total income.
The Heat Trust issued this statement on Friday:
As approximately 22 million customers brace themselves for Ofgem's
price cap rise today, more than half a million households on communal
and district heating networks remain locked out of any protection –
leaving them exposed to even bigger, unrestricted price rises.
Consumer protection body Heat Trust is warning that urgent government
action is needed to support those living on heating systems that are
not protected by the price cap.
Heat Trust, the independent national consumer protection scheme for
heat networks, says those living on communal or district heating systems
are set to be amongst the worst affected by the soaring cost of gas –
with residents facing the prospect of being unable to afford to heat
their homes.
The government’s price cap does not currently apply to the heat
network market, where operators buy gas on the commercial rather than
the regulated domestic gas market.
The Director of Heat Trust, Stephen Knight, has written to Kwasi
Kwarteng, Secretary of State at BEIS, to request that 500,000 households
are not overlooked as the government looks to ease the financial
pressure on families and has been promised a meeting with the Secretary
of State, alongside others from the sector, later this month.
Heat networks are seen as a major part of the UK’s decarbonisation
plans, and can deliver low-carbon, low-cost energy to homes. However, as
the market is currently unregulated, consumers are not protected in the
same ways as other energy markets.
The wholesale gas price, which until last autumn had averaged around
1.5p/kWh for decades, peaked at 27p/kWh at the start of March and has
averaged around 10p/kWh in recent weeks. This means that when heating
operators renew their commercial gas contracts, they are seeing massive
increases, which are often passed straight on to consumers.
Consumers and landlords operating heat networks are already reporting
examples of price rises of up to 700% - the equivalent of the price of a
pint of milk rising from 60p to £4.80.
Heat Trust is calling for government intervention to include:
- Ensuring heat network operators and their consumers receive
government support to ensure that their bills rise no faster than those
of domestic gas customers.
- Bringing forward its plans to regulate the heat network market via Ofgem which were confirmed in December last year,
- Bringing forward plans to help heat networks improve their efficiency to reduce heat wastage.
Stephen Knight, Director of Heat Trust, said:
The
government is committed to making heat networks a key part of its energy
policy, and must not leave families living on these schemes behind.
Heat networks have the potential to offer low-cost, low-carbon
heat, but without intervention, hundreds of thousands of families are
facing horrendous and unaffordable heating bills.
Heat network operators are keenly awaiting further news of the
government’s Heat Network Efficiency Scheme (HNES) aimed at improving
the performance of communal heating projects.
The HNES Demonstrator £4.175m grant scheme has already supported a
number of communal networks to improve their performance, but the full
scheme is not currently due to be launched for another 12-months (spring
2023), and Heat Trust wants to see this scheme brought forward and
expanded to cut bills by reducing heat wastage.
Heat Trust is also calling for changes to the Landlord and Tenant Act
rules which currently make it difficult for landlords to buy gas more
than 12 months in advance, making them vulnerable to price fluctuations.
If they could buy gas for longer periods of time, it might protect
consumers from market volatility.
Knight added:
Our mission is to protect heat network customers.
Commercial gas price increases of this magnitude are simply not
sustainable for heat network customers. They are driving up household
bills in unprecedented ways – many people will have to choose between
heat and food.
Heat networks are commonly used in blocks of flats and are
becoming increasingly common with social landlords, meaning the most
vulnerable people in society are the ones most affected by the current
crisis. We can’t let that happen.