Much needed clarity has emerged on how the government will support domestic heat network customers in the light of high wholesale energy prices this winter. The implications on landlords and heat network operators must not be ignored to avoid the risk of referral to a new Energy Ombudsman.
The following measures to benefit heat network customers have been announced:
- £100 credit specifically for domestic heat network customers (typically received through their domestic electricity bills)
- £400 credit through the Energy Bills Support Scheme (typically received through their domestic electricity bills)
- Potential reduction in £/kWh heat tariffs due to the Energy Bill Relief Scheme for non-domestic customers which provides discounts to customers on the wholesale element of their bills. These discounts must be “passed-through” to final customers by the heat network operator and, based on our estimates, equate to £450/yr reduction in heat bills for a simple scheme operating on gas boilers based on year-ahead wholesale gas prices.
- As with other domestic energy customers, heat network customers will also benefit from capped electricity prices.
We recommend that heat network operators take early action to identify how any discounts to the cost of their electricity and gas supplies will be passed on to customers as soon and communicate this clearly and directly, through revised tariffs or other means.
In addition, as the largest element of this support is due to expire after six months, operational review of heat networks will be crucial to ensure they are being operated as efficiently as possible. This will lessen the impact of increased energy prices when the Energy Bills Support Scheme ends in April 2023.