/ Home & Energy

District heat users – are you happy with your service?

District heating pipes

There are around 210,000 households who get their heat supplied through a heat network – known as district or communal heating. But little is known about people’s experiences or the prices they pay.

Homes or other buildings with district heating get their heating from a central source, such as natural gas or biomass boilers, with the heat then being transferred through a network of hot water pipes.

To meet its carbon reduction targets, the Government is planning for many more households to be on a heat network in urban areas. The last time we discussed the issue on Convo many of you had strong views on this topic and you’ve continued this discussion in recent months. Robert Vesty told us:

‘Me and my partner moved into a one-bed apartment at the end of November and we have just challenged the DH supplier about the costs. Many residents were shocked, as we were, to receive high bills. We were only told at the last minute that the DH scheme would be how our heating/hot water would be supplied, and while I’m all up for it in principle, I feel that the companies supplying it are ripping us off.’

District or communal heating challenges

We’re keen to find out more. District heating schemes are a monopoly and consumers have little choice but to remain with the same supplier even if they are dissatisfied. Also, unlike consumers with gas or electric heating, the supply of heat to homes on heat networks is not regulated and these consumers do not have access to the Energy Ombudsman. So it’s hard to know who to turn to when things go wrong. Ana is concerned about the lack of regulation:

”The Government should regulate the market first, and make sure they are not sending affordable housing dwellers into fuel poverty.’

I’m keen to hear more from you, so please continue to share your thoughts below as your interest has prompted us to take a deeper look into district heating.

Comments
andy davies says:
26 February 2014

Hi Louise,

We are would be happy to discuss our experiences. We’ve had a steep learning curve. We challenged heating charges on behalf of our tenant which cost us a fortune as well as a lot of sleepless nights.

Mark says:
6 March 2014

I recently moved into a building with a communal heating system. I was amazed to find the standing charge is a whopping 79p a day. That’s around £25 a month without using any heating or hot water.

The first bill I got said “You’ve used 0kWh of heat” and asked me for £70.

No mention was made of these charges by the housing association before people moved in, and they claim there’s nothing they can do about it. We can’t change supplier because, as you say, the current supplier has a monopoly.

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‘That’s around £25 a month without using any heating or hot water.’@ Mark

That’s a bit steep. Housing Association dwellings can be rather on the
high side as with their rents…. someone I know has a Council dwelling that
charges £7.99 per week for full central heating and hot water 24/7.

‘That’s around £25 a month without using any heating or hot water.’@ Mark

That’s a bit steep. Housing Association dwellings can be rather on the
high side as also with their rents…. someone I know has a Council dwelling that
charges £7.99 per week for full central heating and hot water 24/7.

A caveat though before moving in.

Second email was surplus to requirement.

Ignore!

jojo says:
6 April 2014

Same story here. just got a letter from energy supplier saying that my heating bill will go up another 9% this year and daily maintenance charge reached £1.20 per day from £1.08 one year ago with no justification of how the money was spent. The energy supplier just sent the letter as an FYI as I can not switch suppliers.

Can not believe CHP was not regulated before it was implemented and customer was exposed to the full risk of price wise without any sort of protection from regulators/government.

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District Heating needs to be regulated! says:
7 April 2014

My non for profit landlord (housing association) has a district heating system supplying 101 properties, one of them being mine. We was promised bills of around £5 per week when we first moved in to our level5 eco houses just over 3 yrs ago and the development won the Sustainable Housing Awards 2011 (Won this from what was written on paper and non of the save the planet technology is working). I pay a service charge for the use of solar panels and energy centre of around £30 a month but i am charged 6.4p per KWH, 24 hours a day for electricity when i believe it should be free when its daylight. The killer for us is the heating and hot water. My hot water tariff is currently 11p per KWH. When we first moved in it was 24p per KWH! I obtained their gas bill recently and was shocked to see they are paying 3p per KWH for gas.
They turn this into hot water and charge 11p per KWH to us. Quarterly winter bills are coming back at £400 plus about £100 in service charges. If you look at the tariffs, its actually cheaper to use electric heaters in the winter as they cost half the price to run. When i question them about the high cost, all i hear is that all they are charging us what it is costing them and they insist they make no profit (yeah right!). Ofgem don’t want to know. I cant switch to another cheaper provider. Its their monopoly. The only way out is to move which doesn’t feel fair. The sooner some government department realizes this and introduces some regulations the better.

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andy davies says:
7 April 2014

We all have the same complaints but there does not appear to be any support for those with Communal/District Utility Systems. It was a terrible idea and we are picking up the costs with no consumer rights.

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NO CHP THANKS says:
29 April 2014

Hi Louise,

Good to see this thread on top of the old one. I think it would be great if we could make this conversation known by more people so that you can collect more response. As of now I think the biggest issue is that most of customer does not even know that they are not protected in this market and they don’t know calling OFGEM, EO,Citizen Advise would not help.

As anticipated before, more and more sites are poping up in London, in Stratford, Lewisham etc. I am afraid it would only get worse if there is no action from CMA.

Will Which? in a position to ask the ESCO to send a questionnaire from Which? to all its users so that you can get more feed back? I think that might help you to gather more information.

Thanks,

David

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Non-disclosure says:
29 April 2014

Thanks for the great article Louise.

My wife and I have recently purchased a flat. During the sale no mention of daily charges was made, only a loose reference to charges in some text buried in the contract of sale. Even the text in the contract simply stated you will be charged for heating by a third party, which we thought nothing of. The sales person at the property developer pitched the heating costs to us as highly efficient and that they expected us to pay less than with our standalone boiler. We did not get told about the daily standing charge until our home tour after completion! So we were understandable shocked, as we were now paying an additional £35/month over what we had budgeted for. We can just about afford it but its an unfair push towards ‘sub-prime’ status that we had not expected.

Out of curiosity myself and various other tenants in this development have questioned other residents on whether they were told about these charges at the point of reservation/purchase. It seems that no one was told.

I do not understand how this can be legal!

As a final point so not to point the finger solely at our property developer. My wife and if went on a pretend shopping trip to another developer’s showroom in the area. Even when asking the questions about district heating and its associated charges, sales staff skilfully avoid giving any details at all.

I hope that this situation gets properly regulated soon. I appreciate that properties are being built rapidly with district heating, to meet the demands the government (and its people) are placing on developers. However this borderline criminal behaviour should not be possible in this day and age, with the consumer protection act in place.

NO CHP THANKS says:
30 April 2014

You are so right to point out the situation in sales office. I am even wondering how many of the sales of these flat are actually full time employee of the company. After let you agree to buy the property and get locked in to some ESCO contract for 25 year, they might go to work elsewhere 3 month later.

Also, as I know a lot of property developers would do road show in Asia selling properties before they start selling domestically. Given that you did not get any specific answer after asking about district heating. I can only imagine what would be happening in Singapore and Hong Kong.

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Undecided buyer says:
10 May 2014

Hi,

I have read the articles (including the previous one) and the comments with much interest. I am in the process of buying a property and I have only just been made aware (through the valuation) that it is part of a heat network. Needless to say, there was no mention of this when I inspected the property.

Luckily, we haven’t exchanged contracts yet, but I have already paid £1000 as deposit and carried out all the steps (including signing for a mortgage!) towards the purchase, which cost me time and money. I am still in time to withdraw, but I would have to face some losses (including the fact that I am currently renting, and was planning to move in the next two months. Not having a property to move to means that I will have to spend more on rent).

The flat I’d be moving into would be a leasehold. Any chance that the standing charge might be included in the leasehold fee (already considerably expensive)?
I have instructed my solicitors to investigate on this issue, but at the moment I am looking in all directions for help and advice.
In the other conversation, I have read of people that had to replace some valves which were causing higher standing charges. Once the valves were changed, was the problem solved? Or was there still a standing charge to pay?

I am also planning to ask the current residents in the neighbouring flats about their bills, but I don’t know how many of them will be willing to share this information with a stranger.

One of my main reasons for moving into this flat was that it was a new build and I was hoping to considerably reduce the cost of bills. The idea of having to spend more is grimly humourous.

I would like to be kept in the loop, are there any web pages, groups, petitions, etc that I could join?

NO CHP THANKS says:
12 May 2014

This is from my own experience, not sure it would be the same for you but hope it might help.

1. it is NOT covered by standing charge for me. I pay to ESCO another 360 GBP standing charge on top of all service charge to property management firms. However, there are other cases I have read and learned that ESCO charge the standing charge WITHIN service charges. HOWEVER, regardless, you will need to pay one way or another so that when you isolate all the cost related to your heating and hot water, it is NOT cheap and you will have to pay a lot even you don’t use anything. And, you will never be told in clear manners what you are paying for but a lot of vague terms like “maintenance”, “future equipment replacement”,”insurance”, even more funnily, “bad debt provision”. (so when you pay more because you neighbour might decide not to pay his bill, but why?)

2. depends on your lease, I don’t think you will be able to change any major installation in your flat. Changing any valves or layouts in your flat might void your warranty on the system with your property developer on new build, so please consider the consequence before action. I changed mine for other reasons, but standing charge does not link to usage I guess, and that is why it is “STANDING” charge.

3. not sure how you picked your buying solicitor. I used property developer’s recommendation purely because I was hoping they know the develop working process and have been doing a few properties on the site so they would be more efficient. But result is I did not know anything about standing charge until I moved in 2 month after completion. So, you got a lot to check out with your solicitor and you need to be very careful on what is written in your lease. Ask “who owns the equipment on district heating”, “are you suppose to pay cost or tariff”, “any way you could change ESCO” etc. Good luck if you can get a clear answer so that at least you know what you are buying.

Unfortunately, after suffering on this for more than a year, Which? is the only organization that helped on the issue. I wish you all the best finding another place you can discuss about this and please let me know an I shall join you.

1. Citizen Advise
2. OFGEM
3. FCA ( Due to the fact ESCO is holding my money for future equipment replacement, I would like to know how the account segregation is done, what interest I get on my balance, if I sell my property in 2 years, how can I prove to the future buying I have money locked in with ESCO. Also, why a energy firm can hold money on such a large scale. 200 gbp a year * 200k house hold makes it 40mio GBP)
4. EO
5. OFT (CMA)
6. Consumer Futures
7. CHPA
8. UKDEA
9 DECC

if you will have to face a transparent charge for 25 year, the upfront value of all will be thousand of GBP. On the other hand, your flat worth value as well. Also, I think Which? is helping to get the market condition to be better. Should you pull out because of the utility bills? I can’t answer it for you. But, should you check out as much as you can before you move in? I think you definitely should, because so far, this is a purely private market with no specific regulations for customer protection ( you can hire a solicitor to take on the QC(s) your developer would hire, good luck), and you don’t want to regret your decision later.

andy davies says:
12 May 2014

I would not buy another property with this type of system as there is no consumer protection available.

Arunn says:
15 May 2014

Wow, I am waking up to much of this only now. And feel somewhat silly to not have questioned this myself before.

We recently purchased a house that receives heat supply from EON DHS network. On paper, it sounded great. More efficient than gas boilers. On Demand heat supply. No boiler maintenance overheads etc. They estiamated our annual bills including standing charges will be around 600-700£ for the 3 bedroom house. Given its a newbuild, double glazing, improved insulation etc, and the fact that we are 2 adults in full time work, and pretty careful about our energy use – was expecting to keep low.

6 months in, we have been slapped a bill of nearly 650 quid. Remainder of this year we have a min of 200£ to pay on standing charges alone – which is priced at £30 per month.

I started waking up to facts only when i started speaking to our neighbours yesterday. One of them is looking at a £1000 bill for the same period, while the other is looking at less than £300. This has been coupled with a phone call from EON to all three of us asking to come in to change the montherboard and the heat Interface Unit this week. No explanations why. As it sounded fishy, I called EON, to try and get some explanation for whats going on. To both my neighbour and me EON advisor on the phone had stated that they have been receiving numerous complaints about the billing from our network.

The reason for changing the motherboard and Heat interface unit is quoted as ‘improving reliability’. They have not yet clarified exactly what is unreliable, and if these parts they are replacing may affect the meter reading in any way.

So I decided to do a little search on the web for people having similar issues and came across the conversations on Which? and this article. Thank you for hosting this discussion on looking into this. I fully intend to follow up with my neighbours and find out what is going on with others as well.

I always felt there was the potential risk of lack of competition and no option to switch away from the heat supplier for competitive prices. But to realise that this industry is so unregulated and such discrepancy in the standing charges just sounds crazy. It is not clear to me if these standing charges are at cost or profited from, and there is no clarification on any documentation I have received so far. The standing charges have been explained as needed in order to do essential maintenance, if that is the case it should not be a profit making avenue IMHO.

I am currently challenging the costs they have billed us for and hope I can get some clarify from EON about exactly what their engineering works are about.

Would be more than happy for someone to get it touch if further details would help. We are at UB7 in West Drayton.

In a way it is good to know we are not alone here.

Jeremiah says:
26 November 2014

Hi Arun

I am in the same development as you. We have had massive issues with eon recently when they changed the parts on the HIU and the bills went up 500% with no change in usage.

I reported to eon who said everything is fine no surprises there as they are now charging phenomenal bills…

Jen says:
21 May 2014

I am a housing association tenant and I have been trying to fight this for well over a year. We were massively misled at sign up, told it would be cheap and only one bill. Started paying E.ON when I moved in and after 4 months got another very large bill from them claiming that we had not been paying for heat!
I have never signed a contract with E.ON and it is not in my tenancy agreement about the 25 year fixed term I have inadvertently been signed up to by taking the flat!
District heating has been nothing but a pain, it’s not cheap, efficient or reliable and all I have to look forward to is 25 years of paying maintenance for something that I was not aware of!
Surely being entered into a contract, that I actually have not signed, without all the information is not just immoral but illegal?

andy davies says:
4 June 2014

http://www.lease-advice.org/decisions/8587pdf/9001-10000/9596.pdf
I did take the matter to the 1st Tier Property Tribunal, see note above. I didn’t do the matter justice as I couldn’t afford a Barrister.

Does anyone know the law on utility bills as since this event we have not received a bill since January 2013? Is there a time limit?

NO CHP THANKS says:
10 June 2014

Hi Andy,

I read the report fully. I am sorry to learn about your issue.

Among all the things that I have thought, I think it is very important to let you know that the way you are charge on heating is not going to make life easy for you at all. Hot water flow in the pipe but to charge 11C temperature loss regardless is just wrong.

Heat meter is a well established product and given that you property is relatively new, I don’t see why it is not installed on your system.

It should measure the speed of water flow in the pipe and detect the exact temperature difference on in and out pipe to determine how much energy has been used in your flat.

Obviously for each KWh heat you use, considering the loss in the heat net work etc etc, the boiler need to generate more than 1 KWh. How much is the network loss is another issue that is pending to be checked. ( see Bill’s post below)

http://www.energ-group.com/district-and-community-heating-solutions/residential-meters/heat/

Also, as you have biomass boiler. Have you checked if the property management has registered the boiler for relevant government relieves starting from Renewable Heat Incentive?

https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi

http://www.hoval.co.uk/products/wood-pellet-boiler-stu/

andy davies says:
10 June 2014

Thanks for your comments. The trouble is the developer/management company won’t discuss anything with us at all. They haven’t installed the heating controls to meet building regulations. They have not sent us a bill since January 2013 despite requested to do so. They won’t send us a summary of accounts so making requests of any kind is unfruitful.

Bill Watts says:
9 June 2014

I am a consulting engineer part of a practice [Max Fordham llp] who design these installations for housing schemes.

Apart from the potential benefit of not having a boiler in your dwelling there is no benefit to the resident.

The heat losses from the systems means that 30 to 70 % of the heat is lost outside the dwelling. This percentage of heat lost goes up as the dwelling gets better insulated and needs less heat so you don’t see the benefits of these new low energy flats and houses. Electricity is always needed to keep the pumps running. They are expensive to maintain.

Why are we doing this and what is the point of them if they are very expensive to install [ £5000 to £15000 extra per dwelling ], expensive to run, and use a lot more gas producing more CO2?

These systems are sold to policy makers as “Green” and “Low Carbon” technologies.
The truth is that the policy makers don’t know what the losses and real costs are.

The industry who certainly do know as they are charging you for it, will not publish the data. Housing associations who run these systems are embarrassed and don’t want to publish the data either. The Department of Energy and Climate Change [DECC] collect a huge amount of data about energy, but do not have any data on community heating. The fact that the data from this WHICH? discussion is so valuable is an indication of the fact that nobody wants to publish the data.

There is a rational that at some point in the future some form of low carbon heat will be used to drive Community heating systems. That may be the case but it isn’t happening now and may never happen.

In London the planning policy more or less stipulates that you have to install district heating to get planning permission for big developements. The UK building regulations calculations you need to submit to work out how much energy your building is going to use tells you to assume that the Community heating losses are 5% – way less than they will be. So a developer, like a housing association is under a great deal of commercial pressure to put one in. You can try to get out of it but it is a big risk that will cost you a lot of money if you loose and don’t get planning permission. At a less formal level it is being portrayed as a eco thing to do.

I think the policy is misguided and the receivers of heat from these systems are the victims of miss-selling. I think that the bills should be no more than if they were from a gas supplier with adequate allowance for the maintenance and replacement of a domestic gas boiler.

It is great that WHICH? is taking this up as very few politicians will. For the residents involved the increased energy costs are far greater than the 5 to 10% being discussed on the gas and electricity bills.

Melissa says:
2 July 2014

Really Syphathise with many comments here. I am a leaseholder on a 1970s south london (Lambeth) estate. I pay £1,200 per year for heating and hot water which i regard as quite high given i live alone and work full time and the property has double glazing and thermal upgrades. Lambeth also increased the bill by 50% mid year in 2013 and then removed the option of allowing leaseholders to disconnect from communal system. They also use an ESCo and the contract is let for 6 years wheras Southwark purchase every 2 years to get the best price. Furthermore, if a landlord fails to consult residents on expensive contracts, then legally costs are capped at £100 per year per service. ( I believe) Lambeth failed to consult on bulk fuel purchase and i am currently querying this. Legal firm Trowers have done a very useful legal note on this and there is a good article here http://www.insidehousing.co.uk/eco/landlords-warned-over-rush-for-district-heating/6523069.article

To note there are a couple of relevant studies on this –

The Department of Energy and Climate is to hold a consultation on the EU Energy Efficiency Directive’s application of metering and billing within district heating systems, due to come into effect in June 2014.

OFT currently doing a study into residential property management which includes procerement of servides so some may wish to comment on this. the website is https://www.gov.uk/cma-cases/residential-property-management-services (i have a copy of this scoping paper which i am happy to share)

Justin says:
13 July 2014

I have moved in to the Olympic Village and just received my second bill. The first was for about £75 since it was for six weeks, and my second bill is for £53 for one month. I live alone and my usage was about £13, the rest is a standing charge of about £18 and then a common charge on top.

This pricing is absurd, it is insane that my usage is around a third of the bills I am getting, but there is no other option – there are no other suppliers to choose from.

I consider this a big problem and to be honest, I won’t stay here because I just can’t afford to waste this money. Luckily, I rent this flat so I can leave quite easily at some point, but I feel sick at being ripped off in this way. Who on earth came up with the idea of charging these extortionate charges on top of actual usage? I feel sick at the greed of it all. Worse still, the cost information isn’t provided to you until you have paid and signed on the dotted line for the flat, by which time you will lose out in non-refundable costs if you decide to cancel.

NO CHP THANKS says:
14 July 2014

So your Common shared charge is costing you more on the bill compare to your actual usage. 53-13-18 =22

Don’t they tell people the system is SO efficient to save money and generate less emission? Eventually, it seems either we are just heating some communal pipes for nothing, or we are being ripped off.

Michael says:
21 July 2014

Justin

Out of curiousity could i ask what your usage was in KW/h terms for the £53 bill. From my review of the eastlondonenergy website, you should be paying 7p per unit, 7p for common shared usage (which is the losses fee) and a standard charge.

I have worked out, against government figures published on the office of national statistics, that a “high” annual bill in london for 2013 using gas was £729.00. This is based on 15,000kW/h usage per year which is a average government benchmark. It would be interesting to understand what your bill would come out too using 15,000kW/h as your average use. Then you could really understand the magnitude of your problem.

Having done some really rough calculations, if your consumption was actually 15,000kW/h you would pay nearly £3000 per annum… This based on your unit cost of 7p common charge unit cost of 7p and standard charge of £13.

NO CHP THANKS says:
22 July 2014

Hi Michael,

I have done this argument with my ESCO before, they would not “agree” with you. ( of course not!)

They would tell you that the price you pay to them on heating is including cost of boiler insurance, future equipment upgrade/replacement, annual service of HIU in your flat, bad debt provision etc.

So they would give you a comparison table base on gas comsumption + boiler insurance + …+….. and tell you you are actually getting a good deal.

But, I just can’t agree with that.

1. I am not sure forcing me to buy a 15 GBP a month boiler insurance in the comparison table make any sense.
2. Same apply when they say I HAVE to replace my boiler every 11.2 years. ( what if I am a low heat user? we all know there got to be a freedom of choice there)
3. they say you get heat unit in your flat, so for 1 KWh of heat, it takes more than 1 KWh of Gas to generate it, and in my own case, the ratio is nearly whopping 2. Given the gas boiler down the market is of efficiency 85% -95%, I am NOT sure that makes any sense to me.
4. In the price comparison table I got given, the usage figure is said to be taken from SAP (Standard Assessment Procedure), but when you look at it more closely, SAP has a lot of strong assumptions, that usage number is supposed to be your usage when outside temperature is fix and you only heat your flat to 18 degree or something like that. So, you actual usage would be much higher than the ESCO marketing material. So, you an do the maths, unit rate at 7 pence is almost double of gas price, the more you use, the more likely it is more expensive than gas.

Also, don’t they all run something called CHP to generate electricity? Where do we get the benefit of that?

Also, government gives a lot of benefit for CHP and Renewable energy, I am not sure that is clearly spelled out in the bill either.

In short, it is very expensive and customer got offered zero flexibility(choice) in this local monopoly market.

Justin says:
31 July 2014

My actual usage was 220kwh for that month, charged at £0.067p/kwh

Michael says:
22 July 2014

Thats interesting.

However, the simple argument back to the supplier is if you were to create a sinking fund for boiler replacement yourself outright, this would be no more than £100 per year max!. Also, why would we need cost for future repairs/upgrades if we have insurance.

The most intriguing thing for me is that the supplier doesnt take into account NPV of the value of currency. I bet they will increase the price based on inflation, but dont take into account the real terms effect of interest rates, i.e boilers will cost less in 11 years time.

NO CHP THANKS says:
22 July 2014

Can’t agree more with you. I asked my ESCO about sinking fund time and times again, but they never reply to me directly about it.

Also, how do I know they won’t ask me for more when the real replacement is due to take place? “emm I have not charged enough, give me more!” do I have a choice not to pay?

Also, given the way they are charging, it is more than like they would be accumulating cash balance of everyone toward the actual major equipment replacement due to happen in the future. If that is the case

1. what is my balance each year?
2. what interest do you pay on the cash balance?
3. how can I prove to the potential buyer I have balance with ESCO when i want to sell my flat?
4. which government body allowed a energy firm to hold people’s money? Where is the FCA approval for them to hold my money for such a long horizon?
5. is the site segregated from another site? Is my personal account segregated from my neighbour?
6. in case of ESCO default, who would be protect leaseholder interest?

the 11 year comparison is just a joke. One of flat on my site is a retirement home of an old couple, during the winter they would live in a warmer country. So their heat usage is significantly lower than a family with 2 kids. (same case apply to frequent business travellers in one bed flat?) Then they might have a boiler perfectly working after 13 years maybe? So the comparison is totally non sense.

Mark says:
21 August 2014

This page has been up for six months now, so it would be nice to hear from Which? about what they’ve found out.