This week I led a Westminster Hall Debate on the regulation of heat networks in homes around our community. You cant watch the full debate here.
These systems power entire estates by sending hot water and steam via insulated pipes from a central generator, instead of having a boiler in each home.
There are around 14,000 of these heat networks in the UK, serving an estimated 450,000 customers and providing around 2% of UK buildings’ heat demand. Their use is increasingly common in south London, with networks serving buildings in Lewisham, Greenwich, Southwark, Wandsworth and Lambeth, among others.
These systems could provide part of the answer to a lower carbon domestic energy mix, something we should continue to strive for. However, their potential benefits are completely undermined by fundamental consumer rights issues, which were brought to my attention by a group of residents from Catford.
Unlike other domestic energy services, these systems are not currently regulated and are effectively run as monopolies. This leaves residents paying over the odds for their energy, with few ways to track or control their usage and no opportunity to switch to a cheaper tariff.
These residents are not enjoying the same benefits as gas and electricity customers, for whom it is now comparatively easy to switch supplier to find the best deals. With no motivation for suppliers to compete, the monopoly becomes further entrenched and it is residents that suffer.
Constituents put it best when they describe the ‘hidden’ but very real consequences this has for them.
For those lucky enough to own their home, it is a significant financial inconvenience and may be a hinderance when they come to sell their property.
But for residents who are social housing tenants, receiving Universal Credit, those holding down several part-time jobs or just running a tight household budget, it poses a much more fundamental problem which threatens to destabilise lives.
The Competition Markets Authority (CMA) has recently recommended a series of reforms to the sector, including that these systems are regulated by OFGEM as other sources of domestic heating are.
I can see no reason why the Government would continue to allow an industry it hopes will grow and support our green ambitions to develop with built-in disadvantages for consumers.
And I see no reason why a double standard continues to exist between residents using these systems and those heating their home with electricity and gas.
I have urged Energy and Clean Growth Minister Claire Perry to adopt the recommendations of a recent Competition Markets Authority review; regulate these systems properly; require a culture of transparency and give residents the protections that have long been standard with other domestic heating fuels.
Watch the debate in full here.