District Heat Networks

Matthew Pennycook Excerpts

Wednesday 28th April 2021 Westminster Hall

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Ghani. In preparing for this afternoon’s debate, I looked back over my records and discovered that the first time I raised concerns about inadequate consumer protection for customers of district heat networks was in early 2016, a matter of months after I was first elected to this House.

In some ways, the situation has moved on significantly since that date. I recall at the time making the case for greater protection for heat network customers, only to be told by Ministers that statutory regulation would not be appropriate, and that it risked strangling an emerging industry with red tape. There is now at least a consensus that further regulation is required in this area.

I remember pressing the Competition and Markets Authority to open an area of investigation into the industry, only to be told it had no plans to do so. The CMA eventually carried out a market study that determined that many customers of privately operated communal heating schemes are not well served on price and service, and it recommended a statutory regime governing the regulation of heat networks.

Yet, taken in the round, there has been a tangible lack of progress when it comes to doing what is necessary to ensure that heat network customers are adequately protected. That should be a concern to each of us, but it should particularly concern the Government, not only because of their avowed aim to keep customer bills as low as possible, but because low levels of consumer confidence in heat networks, born of consistently poor service and expensive bills, will make it that much harder for the UK to decarbonise heat and reduce our overall greenhouse gas emissions.

In the time I have today, I do not intend to delve into the enormous challenge presented by the urgent need to decarbonise heat, and what more the Government must do to meet that challenge, not least because I know that my hon. Friend the Member for Southampton, Test (Dr Whitehead) will do so with his customary rigour and incisiveness when he responds from the Front Bench. I do want to make the point that we will struggle as a country to take the public with us when making the case for the benefits of large-scale heat network deployment if we continue to put off addressing the systemic problems in the sector.

It is true that for many customers, heat networks offer an efficient supply of heat and hot water, at prices that are close to or lower than other sources of supply, such as gas and electricity. I am sure the Minister will cite evidence indicating that the majority of customers are satisfied with their systems. However, it is beyond dispute that a significant minority of customers of privately owned heat network schemes, including thousands of my constituents, given the number of new build developments in my constituency, are still not getting a fair deal.

Whether it is unreasonably high tariffs; significant variation in unit prices and average bills, not only between schemes but between customers on the same scheme; significant month-by-month variation on standing charges, which are often incredibly high; a lack of transparency in billing; or frequent outages that are the result of sub-standard or poorly installed equipment, far too many heat network customers are being badly let down.

As a voluntary consumer protection scheme, the Heat Trust does a good job. It is a welcome development that a growing number of sites are registering with it, but the protection it affords to customers on such sites are inherently limited. Similarly, the process of attempting to secure redress by means of a complaint to the energy ombudsman is time-consuming, constrained by the fact that the service deems issues such as heat price increases to be commercial decisions that it cannot adjudicate on. Of course, that is not available to customers on sites that, for whatever reason, have not registered with the Heat Trust.



The simple fact is that neither the trust nor the ombudsman is a substitute for providing heat network customers with the same degree of protection that is afforded to gas and electricity customers by means of formal regulation of the sector.

I say to the Minister: no more delay. The heat markets framework consultation closed on 1 June last year, and we have heard nothing since. Every month that passes without legislative action means yet more expensive bills and continued poor service for heat network customers at the sharp end of industry practice, who cannot afford to wait another year or two for the Government to provide them with the protection that they deserve.

I fully appreciate the demands on the Minister’s time, but I urge her to give the matter greater priority and, subsequently to this debate, to forcefully make the case for bringing forward the necessary legislation to introduce a regulatory framework for the sector as early as possible in the next parliamentary Session. In the interim, will she look again at what more the Department might do to cajole reluctant suppliers and operators to register all their communal heating schemes with the Heat Trust?