Heat Networks: Greenwich and Woolwich

Claire Perry Excerpts

Tuesday 19th February 2019 Westminster Hall

[The Minister for Energy and Clean Growth (Claire Perry)]

It is a pleasure to serve under your chairmanship, Mr Davies, in particular as you have a long-standing interest in the whole area of decarbonisation.

I sincerely congratulate the hon. Member for Greenwich and Woolwich (Matthew Pennycook) on securing the debate. He, as usual, gave us a thoughtful, informed and passionate exposition of the problem. In his current position, and as a councillor for half a decade, he has campaigned hard on such matters. He has also been assiduous in his correspondence with me. We have discussed the matter face to face and via correspondence on multiple occasions. I will address some of his concerns and come back to him on his action points—as we all know, I am a woman who likes to get things done.

To set the scene for why this is an important debate for the hon. Gentleman’s constituents and more generally, we believe that heat networks have an important part to play in the decarbonisation of the heat system in future. About half a million customers are part of a heat network, with about 14,000 individual schemes throughout the UK. As he has pointed out, however, there have been ongoing concerns about treatment of consumers and effective regulation of a small monopoly provider. That is why the CMA produced a report, to which we responded.

Last December we published a commitment to developing a market framework that will protect customers, including through regulation where needed. I believe that five of the seven networks in the hon. Gentleman’s constituency are members of the Heat Trust, to which he referred. Their feedback and that of others in the market has demonstrated widespread support for that commitment.

An immediate priority is to tackle the lower-performing networks. The hon. Gentleman makes a very strong case as to why some of those are in his constituency. Before addressing the broader question of how we regulate the market, it is hugely important to address the problems of people who are already on lower-performing networks.

Of course, the market is already regulated, and that includes consumers on networks, who are covered by general consumer protection regulation. In addition, there are the Heat Network (Metering and Billing) Regulations 2014, and customers on a Heat Trust registered scheme have free access to the energy ombudsman’s services. I was very pleased to meet energy ombudsman representatives only a few days ago and welcome their commitment to improving customer service for all customers, including those on heat network schemes.

Our large-scale survey in 2017 found that, on average, heat network customers are as satisfied with their heating systems as non-heat-network consumers, and that, on average, they pay about £100 less for their heating and hot water. Clearly, however, there are also examples of consumers on heat network schemes who are more likely to experience a loss of heating and less likely to receive a bill statement or account summary. As the hon. Gentleman eloquently pointed out, that reduces people’s understanding of what they are being billed for and possibly their ability to campaign to change suppliers. Heat networks are perceived reasonably well, but clearly there is much more to be done. There is evidence that some customers are getting poor deals in terms of value for money—the prices that they are paying.

Therefore, as we said in December, we agree that the sector needs to be improved. We have set out our priorities for addressing the CMA’s recommendations. We strongly believe that a long-term market framework needs to be underpinned by regulation, with Ofgem best placed to take on the role—essentially, taking on whichever legislative powers we agree to give it. As the hon. Gentleman said, we will consult further on those powers later this year.

As I said at the beginning of my speech, that is not just because we want to ensure that consumers have adequate redress, particularly if they are on low-performing networks, but because there are huge potential benefits, both for customers and for decarbonisation. Heat accounts for about one third of the UK’s carbon emissions. We have to cut emissions from heat. We have had various other schemes, such as the renewable heat incentive and the energy company obligation. In February, I opened the heat networks investment project, which will see up to £320 million of capital funding invested in heat network projects through grants and loans across England and Wales.

The hon. Gentleman, who is standing up for his constituents in Greenwich and Woolwich, will know that many of the early heat networks came about in London. There are real planning incentives to bring forward networks in London, and there have been some excellent examples of that being done. I was happy to convene an investor roundtable a few months ago, to understand how we could reduce barriers outside London to ensure that networks could be deployed more fully. As we roll them out, though, we have to be mindful of the consumer experience, so we not only intend to bring forward legislation, but want to ensure that the Heat Trust or equivalent standards are widely adopted, are in place, and are actually delivering the consumer support required.

As the hon. Gentleman knows, the Heat Trust is a UK-wide independent consumer protection scheme, which draws on the terms of service offered to gas and electricity consumers. Heat Trust membership continues to grow, but, as the hon. Gentleman pointed out, right now it is a voluntary scheme. He makes an excellent suggestion: I will indeed, while we are in this period of refining and consulting on the regulatory requirements, commit to writing to all heat network members that are not part of the Heat Trust scheme, essentially to suggest that it is a very high-quality voluntary scheme and that we would like to ensure that all members sign up to it. That was a very good suggestion.

We are absolutely committed to heat networks. It has been good to learn from some of the experiences, both good and bad, in London. It is no comfort to the hon. Gentleman’s constituents, however, that his area still has networks that he and others believe are providing a poor-quality service. I will therefore leave this debate with redoubled vigour to ensure that we consult on and bring forward the necessary framework as quickly as possible. I have to say, however, that the way to unclog the current parliamentary timetable, which is snowed up with Brexit, is of course to vote for the deal, so that we can get on with our lives and get on with dealing with the very many other issues that affect the day-to-day lives of all our constituents.

Question put and agreed to.