Government’s Heat Networks Consumer Protection Response leaves many unanswered questions

The Government response to the Consumer Protection consultation earlier this month has provided some clarity on rules that will be applied to heat network suppliers and operators from January 2026. However, a wide range of issues remain unresolved and subject to further consultation, extending the period of uncertainty for landlords and other operators.  Some key points to consider:

• Guaranteed Standards of Service and compensation payments will not be introduced in January 2026 and are subject to further consultation and review.
• Views on price caps and fair pricing have been reviewed under this consultation, but detail is being dealt with under a separate Ofgem-led consultation not due to be responded to until the autumn.
• All consumers will be required to be provided with a Heat Supply Contract, although this may form part of a lease, tenancy agreement or service charge agreement. Further work will be carried out between Ofgem and MHCLG where the authorisation requirement conflicts with existing Landlord and Tenant regulations.
• Proposals for step-in arrangements (to protect customers if their supplier or network operator becomes insolvent, has their authorisation removed or fails for and other reason) have largely been abandoned, although a Special Administration Regime will be put in place and used in instances where Secretary of State deems it necessary.  This limits protection for customers significantly and will add nervousness to those considering connecting to larger heat networks.
• Clear protections against disconnection and involuntary installation of pre-payment meters following non-payment of bills will be introduced for some vulnerable customers, although very small networks will be exempt from this requirement initially (reflecting concerns about the burden of unrecoverable debt on these small networks which is normally borne by the other customers).
• Heat charges will be required to be unbundled from other charges (e.g. rent or service charges). However, initial exemptions will apply where the Landlord and Tenant Act 1985 permits these charges to be included in rent or service charges.

Far more detail is included within the response and draft authorisation conditions, but clearly many issues remain unresolved, with further consultation on fair pricing, enforcement and penalties, authorisation conditions, technical standards, regulatory cost recovery due before the January 2026 start date.