Consumer concerns about district heating hot up

A new Which? report has raised concerns about whether district heating schemes, increasingly used at high profile developments, offer consumers a fair deal after we found widespread consumer dissatisfaction with costs and poor customer service.

Around 210,000 UK households are currently connected to district heat networks with the Government predicting this could rise to eight million by 2030. This expansion is being driven by the UK’s carbon reduction targets as these networks may help reduce emissions by using waste heat from industrial processes or low carbon fuel sources such as biomass or waste. Over half (55%) of the current schemes are in London, including developments such as Highbury Square, East Village in the Olympic Park, Greenwich Square and Royal Arsenal Riverside.

Unlike the majority of UK homes connected to mains gas, district heating schemes are not regulated so many customers have no opportunity to switch suppliers or right to redress should the service they receive fail to meet expectations.

We conducted a series of focus groups and telephone interviews to better understand consumer concerns, and we also looked at price data from more than 50 schemes supplying heat to around 87,000 households. Our investigation found examples of:

  • Estate agents not being up-front about heating costs meaning that prospective tenants are given inadequate information, or even misled, before moving in.
  • Long term contracts meaning customers can’t switch e.g. the company supplying energy to the Olympic Park scheme has a 40 year deal.
  • Difficulty in working out whether heating bills are fair and accurate, fuelled by unclear billing and doubts over how efficiently their scheme is run.
  • Consumers being let down by poor customer service and complaints handling, with many having no access to Ombudsman schemes or independent redress if things go wrong.

While a voluntary consumer protection scheme for the sector will be launched soon, we believe this doesn’t go far enough to protect consumers. We want to see:

  • All district heating schemes registered and homebuyers and tenants given up-front, clear and accurate information about their scheme including price details.
  • A single organisation made responsible for consumer complaints and all district heating consumers given access to an independent Ombudsman.
  • An independent and tailored heat price comparator to be developed so consumers can compare their heating costs against other schemes.
  • A commitment to explore price regulation to ensure the prices consumers pay are fair.

Richard Lloyd, Which? executive director, said:

“While district heating schemes may have some environmental benefits, there are real questions over whether they offer a fair deal to customers. We found widespread consumer dissatisfaction with costs and poor customer service among the key concerns.

“Our report raises a number of red flags, and Government and regulators must act to improve consumer protection and review pricing to ensure it is fair.”

Notes to Editors

  1.  Our full report “Turning up the heat: Getting a fair deal for District Heating users” can be found here.
  2. Which? conducted focus groups and telephone interviews with consumers on district heating and collected price data on more than 50 schemes supplying heat to around 87,000 households around the country.
  3. District heating systems tend to be off the gas mains so that heat, in the form of hot water or steam, is delivered by a network of pipes from a local generator to individual districts, housing estates or tower blocks. They are considered to be a potential source of delivering low carbon heating for the future.
  4. While mains gas or electric heating customers have access to the Energy Ombudsman, it does not cover district heat networks. Depending on who owns the network, some consumers can seek redress through specific ombudsman schemes, such as the Local Government Ombudsman. But this still leaves many consumers without access to any independent adjudication.
  5. In 2013 following a series of complaints from consumers, the Office of Fair Trading (OFT) now the Competition and Markets Authority (CMA) looked into whether a wider study should be carried out on the district heating sector. The CMA is currently talking to industry and government with a view to encouraging suppliers to comply with competition and consumer protection law.

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