Sutton Decentralised Energy Network

Paul Scully Excerpts

Friday 4th February 2022 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

I congratulate my hon. Friend the Member for Carshalton and Wallington (Elliot Colburn) on securing this important debate today. I think we are at well over three figures now for the number of times he has stood in this place and raised matters to do with Carshalton and Wallington.

My hon. Friend has had to mention SDEN far too many times. Residents in New Mill Quarter have had to suffer and I have seen a lot of the comments that have been made, although not as many as he has as a dogged champion for those residents. Local Facebook groups and newsletters that I have read as a Sutton Member of Parliament call out for someone to come in and sort the situation out. In May, we will have that opportunity.

I am sorry to hear about my hon. Friend’s constituents, including those at New Mill Quarter, who have been experiencing all those issues with their heat network. I sympathise with them for the difficulties that must cause and agree with my hon. Friend about the need for protections for heat network consumers.

The experiences of constituents that we have heard highlight the importance of the Government’s commitment to regulate the heat networks market within this Parliament. Heat networks are vital to our net zero ambitions. As we have set out in the heat and buildings strategy, they are the only way that we can unlock large-scale renewable and recovered heat sources such as energy from waste, waste heat and heat from rivers and mines. When they are deployed effectively, heat networks can bring together greater heat efficiency than individual gas boilers, lower costs for consumers, unlike what we have just heard, and support for local regeneration. We recognise when we hear examples such as this that we need to regulate the market to ensure protections for heat network consumers.

In 2017, the Government commissioned a survey to quantify consumer experiences with heat networks in England and Wales. Those results showed that consumers connected to a heat network generally receive a good service and are as satisfied as non-heat network consumers. They also showed that on average a heat network consumer is likely to pay £100 less a year for heating and hot water than consumers on other utilities. We can see that heat networks per se can be a good thing, but unfortunately, as we have just heard, they are clearly failing residents in Carshalton and Wallington and in New Mill Quarter in particular.

We acknowledge the 2018 report from the Competition and Markets Authority, which, like my hon. Friend, considered a number of examples from around the country and showed that a significant minority of heat network consumers experienced high prices, frequent outages and a lack of transparency. We committed to the CMA’s recommendation of regulating the market, consulted on establishing a heat networks market framework and in December published the Government response to the consultation in which we confirmed that we would appoint Ofgem as the heat networks regulator.

The document includes summaries of responses received, and sets out our proposals on consumer protection, regulating the carbon emissions of heat networks, and technical standards. That will include introducing consumer protection rules to combat cases of detriment, such as the outages being experienced by residents of New Mill Quarter. We want heat network consumers to have comparable levels of service and protection to those using electricity and gas.

As part of the market framework, we will introduce quality of service standards requiring notification periods for planned outages and compensation for all outages. Consumers will have access to an independent redress scheme and a consumer advocacy body, which will provide a consumer helpline and priority services for consumers in vulnerable circumstances. The regulator will have powers to enforce price transparency, introduce guidance on fair pricing, set requirements on cost allocation, and conduct investigations into heat networks where prices are disproportionately high.

Finally, consumers will be provided with a minimum level of easily accessible information and guidance on heat networks at the pre-contractual stages of property transactions and during residency. There will be requirements on the provision of heat supply agreements and billing information.

We are preparing to introduce that legislation to regulate the market, but measures are already in place to improve standards for heat network consumers. Heat Trust provides an independent, market-led voluntary standards scheme. Consumers on heat networks registered with Heat Trust benefit from terms of service similar to those in the gas and electricity markets. They are also able to access the energy ombudsman if they have a complaint against their heat supplier. In 2019, the Department for Business, Energy and Industrial Strategy wrote an open letter to all heat networks encouraging them to register their schemes with Heat Trust. We continue to encourage schemes to sign up, raise standards now and prepare for regulation. We also support the Heat Networks Industry Council’s work to establish the consumer protection agreement and the heat network emergency responders group in response to the covid-19 pandemic. We encourage heat suppliers to sign up to this agreement, and we have written to signatories urging them to do more to tackle outages and improve compensation standards for outages.

Though these schemes have benefitted many consumers, we recognise that regulation is needed to drive up consumer standards across the heat networks market. I therefore reiterate our commitment to regulation, as pushed for by my hon. Friend. We have introduced several schemes to support heat network deployment. The Government’s heat networks investment project has made £320 million of capital funding available for investment in heat network projects through grants and loans in England and Wales. This will be succeeded by the green heat network fund in 2022, which will support and incentivise the use of low-carbon heat sources in heat networks. Both of these investment projects ensure adequate consumer protection measures are in place by requiring projects to demonstrate Heat Trust standards or equivalent levels. This ensures that we only support heat networks that deliver fair pricing and are that well-designed, efficient systems.

Furthermore, we have been carrying out work on improving performance across a number of existing heat networks. This provides an evidence base for the development of the heat networks efficiency scheme, which will part-fund operational performance improvements and carbon emissions reductions in existing systems. Further details will be announced later this year.

I was really interested to hear my hon. Friend’s description of what has happened in Sutton. He has raised this on a number of occasions with my hon. Friend the Secretary of State, while he was Energy Minister, and with the new Energy Minister. BEIS officials were concerned about the issues raised by customers connected to phase 1 and so asked the council how the grievances were addressed before approving phase 2 funding. Sutton Council clearly had to recognise that there were service interruptions in 2020 as a result of technical failures caused by the housing developer during the network installation phase of the New Mill Quarter development in Hackbridge. At the time, it apologised and made goodwill compensation payments to all affected customers as part of the apology. The move in the primary heat source connection from temporary to permanent at the Beddington landfill gas site was successfully completed in March 2021.

This is an interesting point: I have seen my hon. Friend’s videos on social media around New Mill Quarter talking about the outages that were happening just last month. However, the council has given us figures that say that, since the heating network was connected to the primary heat source, its reliability has significantly improved, with an availability rate of 99.8% being achieved from March to September 2021. However, the residents I have heard from, and the story that my hon. Friend tells, suggest a different story entirely.

We have to remember that councils do not exist to install heat networks or to install incinerators in one of the most polluted roads in London. They exist to provide a service for their residents who elect them in the first place. They would be nothing if it was not for the people they serve. They should be there to make sure that they keep people warm, to give them hot water and to get rid of their rubbish in an environmentally responsible way. That is their purpose. The incinerator and the heat system are mechanisms to achieve all that, but they are not a means of it themselves.

The council needs to be responsive to its electorate and to those residents. It is disappointing to hear my hon. Friend talk about the lack of empathy and sympathy being shown to them. If it is the council that is providing that service directly, rather than a third party, then it should be more responsive and it should be serving those residents. I hope that, in May, those residents will be able to reflect on that in their consideration, because councillors need to be accountable. If we are to devolve power to local authorities—I am, and always have been, a big fan of devolution—it is really important that residents are able to pull councillors up, so that they do not get arrogant and they do not get complacent. Residents should remember that they will be voting in councillors who will be there for the next four years. Four years is a long time—just think how long ago 2018 seems. Over the next four years, we want to make sure that those residents in New Mill Quarter get the hot water and the heating that they have paid for—it is a service—so they need councillors who will be far more responsive.

Let me have a final word on the incinerator. When I was the leader of the opposition on Sutton Council, I remember speaking about incinerators to one of the previous environment spokesmen on the council. When one was brought in, so much of the debate on pollution was actually about vehicle movements. It is disappointing that, despite burning 70% of the waste of the boroughs that it serves in the south-west London partnership, it does not have enough to feed it. My hon. Friend was absolutely right to talk about the circular nature of the argument in the bid, which included some dubious numbers. It is not appropriate that the talk now is of more vehicle movements in that area. We need to be really careful about that, which goes back to the responsiveness that I was talking about.

In the round, it is essential that heat network consumers are provided with clean and reliable heat at an affordable price. It can work; it does work in other parts of the country. As I have said, it is a real marker of our net zero ambitions, which is why we are developing a heat networks market framework that places consumers at its heart, delivers sustainable investment in the sector, and maximises heat networks’ potential economic and environmental benefits. We committed in the energy White Paper to legislate for this market framework by the end of this Parliament, and we are working closely with industry and consumer groups to ensure that the regulation delivers positive outcomes for consumers.

I conclude by once more congratulating my hon. Friend on being such a champion for his area, on securing this debate and on raising some really important issues for the residents of New Mill Quarter and beyond.

Question put and agreed to.