In a significant regulatory shift, more than 500,000 energy customers across the United Kingdom will now receive protection from unfair price hikes and substandard service as heat networks come under the direct oversight of Ofgem. This major update, announced by the Department for Energy Security and Net Zero (DESNZ), aims to close a critical gap in consumer safeguards that has left many residents vulnerable to exorbitant cost increases.
What Are Heat Networks and Why Are They Being Regulated?
A heat network, often found in blocks of flats or commercial premises, distributes hot water and heating from a central source to multiple properties within a single building. Historically, these systems have operated outside the remit of Ofgem's energy price cap, which applies to standard domestic energy supplies. This regulatory loophole has exposed customers to dramatic price surges, with some reporting bill increases of up to 450% following the spike in global gas prices.
New Powers for Ofgem and Enhanced Consumer Rights
From today, Ofgem will wield new authority to intervene when heat network operators impose unjustified price rises or deliver inadequate service. Customers who experience outages or other service failures will be eligible for compensation, marking a substantial improvement in their rights. Additionally, households and businesses connected to heat networks will benefit from clearer, itemised billing statements, making it easier to understand and manage their energy costs.
Vulnerable customers, in particular, will receive greater support under the new framework. The DESNZ emphasised that these changes are designed to ensure fair treatment and reliability for all users of heat networks, bringing them in line with protections enjoyed by other energy consumers.
Government and Industry Response
Minister for energy consumers, Martin McCluskey, stated: “For too long, customers on heat networks have been unprotected, facing unfair price rises and managing hugely inconvenient service outages. It’s simply not good enough – and that is why from today, we’re giving Ofgem new powers to act and hold heat network suppliers operating a poor-quality service to account.”
This regulatory expansion comes amid broader economic pressures, including rising shop inflation. Recent data from the British Retail Consortium (BRC) and NIQ indicates that shop price inflation jumped to 1.5% in January, up from 0.7% in December. The increase is attributed to higher business energy costs and the recent hike in National Insurance contributions.
Food inflation has also risen, reaching 3.9% in January compared to 3.3% in December, driven by weak supply and strong demand for items such as meat, fish, and fruit. Helen Dickinson, chief executive of the BRC, commented: “Any suggestion that inflation has peaked is simply not borne out by these figures. It is a challenging time for households. Retailers do what they can to keep prices down in a competitive market, but thin margins and rising costs of Government policy make it harder.”
The integration of heat networks into Ofgem's regulatory framework represents a crucial step towards stabilising energy costs for hundreds of thousands of UK consumers, ensuring they are no longer left exposed to unpredictable and excessive billing practices.
