Energy Price Cap: Residential Buildings with Communal Heating Systems

Jim Shannon Excerpts

Wednesday 20th April 2022 Westminster Hall

[Dame Meg Hillier]

My hon. Friend is absolutely right. About half a million people, as an estimate, live in such blocks—not only new developments such as those that she has highlighted, but some older developments that would take a lot of retrofitting to get individual heating systems in place; but that is not the answer and I will come to that in a moment.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for securing this debate. She is right, and such bodies as Ginger Energy have highlighted that domestic customers of communal heating networks should be included within the energy price cap’s protection. The Government were committed to introducing legislation. This affects some 14,000 heat networks in Great Britain—2,000 district heat networks and 12,000 communal heat networks. Half a million customers suffering, half a million homes unheated, half a million reasons for us to take action. Does she agree?

[Dame Meg Hillier]

The hon. Gentleman is absolutely right. When I get to my asks of the Government, I shall be very clear, as the hon. Gentleman and the hon. Lady have highlighted, that the issue has been raised in the House before—indeed, it has been raised since 2018. I will get on to the timeline, and my question to the Government is this: we know about this, so why is it taking so long to resolve it?

The key issue is quite a simple definitional issue: the energy price cap sets a price limit on domestic supplies of electricity and gas, but not on domestic supplies of heat. So developments of the type that my hon. Friend the Member for Lewisham East (Janet Daby) referred to will often have wood-chip burners or an equivalent in the basement, or some other source of supply, and they provide heat to the home, but it is purchased for the building and then sold on to an individual. Ofgem, as we know, regulates the supply of gas and electricity but not, at present, the supply of heat. That means that while the supply of gas to a heat network is regulated, the supply of heat from the heat network to homes is not, because Ofgem classifies supplying heat to a heat network as a commercial arrangement, not domestic. But let us be clear: the end user of this is someone living in a home—a flat, an apartment—who benefits from the communal heating system, often arranged for good reason, sometimes in an attempt to provide green energy, but it has actually left individual residents, whether they are homeowners or tenants, in the lurch.