Energy Price Cap: Residential Buildings with Communal Heating Systems

Philip Hollobone Excerpts

Wednesday 20th April 2022 Westminster Hall

[Mr Philip Hollobone in the Chair]

[Mr Philip Hollobone (in the Chair)]

The sitting is resumed. Our new finish time is no later than 9.10 pm.

[Matthew Pennycook]

Thank you, Mr Hollobone. As I was saying, I recall asking the Competition and Markets Authority to carry out an area of investigation study into this sector. As the Minister will know, the CMA eventually carried out a market study, which recommended statutory regulation. We then had the “Heat Networks: Building a Market Framework” consultation, which closed in June 2020. We had the Government response in December 2021, but no sign of any legislation.

All I will say to the Minister is that this is an issue that has become incredibly pressing as a result of the energy crisis but, as I have said before, it predates that. For a range of reasons, we need to see statutory regulation as a matter of some urgency and I hope that he can give us some sense that in the next parliamentary session time will be found for it.

This is a pressing issue now, as a result of the energy crisis and the pressures that households are consequently facing. It has already been mentioned by several speakers that, as commercial contracts, these heat networks are not covered by the default tariff Act. Therefore, customers who source their energy from heat networks are not protected by the energy price cap.

That is a serious problem because, as others have said, customers who get their heat from these networks are experiencing shockingly high price rises. I recently wrote to the Minister about one case that is illustrative of what is happening in numerous buildings in my constituency. I have a huge number of buildings that are affected, because of the number of new build properties constructed over recent years, whether that is the Royal Arsenal in Woolwich, Enderby Wharf in east Greenwich or the Greenwich Millennium Village. All of them are facing the same problems.

I put to the Minister a case from the Paynes and Borthwick development in my constituency, where the unit energy charge on the development has gone up by 367%. I repeat: 367%, uncapped. Residents are really feeling those increases in their bills. We need the Government to step in and provide an immediate stop-gap solution for these customers, because they cannot handle the increases in the bills that they are experiencing.

Ultimately, I want to see the energy price cap extended to these customers. I realise the difficulties that would entail, in potentially driving more small energy suppliers out of the market, which we do not want to see. However, it is really for the Government to find a way to support those suppliers if they were to bring in such a price cap.

If the Government are not willing to go there, they need to look at targeted support for these consumers because, as things stand, the warm home discount, the energy bill rebate and the household support fund—where it applies—are not enough to help them to cope with rises of the magnitude that we are seeing. Minister, please ensure that we get legislation, so that the sector is put on a proper regulated footing as soon as possible. However, in the short term, please do something for these consumers, because they are really struggling with these increases and they need help now.

[Mr Philip Hollobone (in the Chair)]

We now come to the Front-Bench speeches.

--- Later in debate ---

[Greg Hands]

I thank the hon. Gentleman for his intervention, and I am very happy to look into that. I will speak with my ministerial colleague Lord Callanan, and perhaps he or I will write to the hon. Gentleman about what has been going on with standing charges on heat networks. It is a fair question and I will get back to him on it.

To conclude, I reiterate the Government’s commitment, first, to providing short-term support to those struggling with energy prices and, secondly, to making the necessary long-term changes to improve the heat networks market and make the UK energy-independent at the same time. The heat networks market is a key sector for our green ambitions, but it must also deliver for consumers daily, so we will continue to ensure that prices are as fair as possible.

[Mr Philip Hollobone (in the Chair)]

I call Dame Meg Hillier to sum up the debate.