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Are those on district heating networks getting a good deal?

Heating homes

District heating networks serve around half a million UK homes, but many on these schemes often pay the price for the service. The Competition and Markets Authority is launching an investigation into these schemes to assess whether people are really getting a good deal.

District heating networks supply multiple homes with hot water and heating from one central source, which is distributed through a network of pipes.

There are benefits to heating networks – you get your heating and hot water from a central source delivered straight to your home, so you have no need to maintain a gas boiler. They can be more efficient and environmentally friendly too.

However, as we’ve heard here on Which? Conversation, those on heating networks often come up against problems that far outweigh the benefits.

District heating

One major issue is that there’s no control over the price you pay, with Which? Conversation commenter Richard saying:

‘Our bills are three times what they used to be and this is just for hot water, we cannot afford to put the heating on as this would just tip our bill into silly numbers. For just hot water, we pay on average about £45 a month with a usage of around £11. We then have to pay for our electricity bill on top of these crazy bills.’

District heating customers also have no say over who supplies them and don’t have the right to switch, as Amanda explained:

‘I have recently moved into a three bedroom townhouse powered by a district heating network. I also was not told about the £1.20 standing charge per day fee. My bill from end of Nov to beginning of Jan was nearly £300.’

And as district heating network suppliers are not regulated, most customers don’t have access to the Energy Ombudsman. This means that when things go wrong with your network, there’s little you can do, as Dee explains:

‘We are connected with district heating as we live in a communal area and we have no choice. The problem is it comes from a main base somewhere and it keeps going wrong. We receive calls stating: ‘your heating is off in your blocks until we can fix it’. Now its freezing winter and it has been turned off two days this week already for repairs. When we complain we receive a response stating that someone will get back in 15 days. Whether it’s cheaper than paying separately I don’t know. But it comes with many problems.’

However, customers of suppliers signed up to the Heat Trust scheme have a slightly better complaints procedure available to them. Heat Trust’s independent disputes resolution service operated by the Energy Ombudsman. This service is free to customers of companies who have signed up to Heat Trust.

CMA investigates

With limited protections, little to no choice over supplier, an inability to switch, not to mention paying over the odds for hot water and heating, it’s a good to see that the Competition and Markets Authority (CMA) is looking into district heating networks.

It will examine three areas:

  • Whether customers are aware of the costs of heat networks both before and after moving into a property.
  • Whether heat networks are natural monopolies and the impact of differing incentives for builders, operators and customers of heat networks.
  • The prices, service quality and reliability of heat networks.

With half a million households heated by these schemes and an estimated 20% of households expected to be on them by 2030, we want the regulator’s review to deliver a much better deal for people.

We’ll be sharing your experiences, as well as our research and insights with the CMA, and look forward to getting an update on the regulator’s plans.

Are you on a district heating network? Do you think you get a good deal? What problems do you come up against?

Comments
Patrick Taylor says:
8 December 2017

I am glad to see that Which? is again highlighting the problem. The problems have been manifest for some years and yet seems not to get the attention it truly deserves.

It would seem that the sane advice is do not buy or rent where District Heating is involved. However like leaseholds with onerous clause this is another where consumers are unaware of the major drawbacks and the vested interests keep remarkably mum.

” Any company – including the property developer – can set itself up as a District Heating supplier without a licence, and a full list of those in operation is not yet publicly available.

They are selected by the developer who will receive a commission, or a substantial contribution towards the network infrastructure, in return for a contract to supply the development for at least 25 years. E.on has an 80-year contract to supply Cranbrook, a new town in East Devon.

Once they’ve bought into a development, residents are locked into a monopoly. They are not allowed to fit solar panels or heat source pumps and, whether or not they use their heating, remain liable for often large standing charges which include maintenance and repair of the infrastructure.

Matthew Pennycook, Labour MP for Greenwich and Woolwich, which includes eight District Heating networks, says residents tell him bills have tripled under the scheme, and there’s no transparency in consumption and billing.

Pennycook has been pressing the government to regulate the sector. “Former energy minister Amber Rudd declined to do it because she doesn’t want to strangle a small and newly emerging sector, and the Competitions and Markets Authority says it doesn’t have the resources,” he says. “In the UK, it’s haphazard and the way it’s being rolled out without regulation is damaging it.”
Part of an excellent Guardian article:
theguardian.com/money/2017/feb/05/district-heating-fuel-bill-regulation