Half a million households on heat networks miss out on £200 after Government U-turn

Half a million households will no longer receive a promised payment to help with their energy bills this winter after the Government quietly U-turned on extra support to heat network customers.

Households connected to a heat network, which is often used to heat blocks of flats and councils estates, have faced bills of up to £1,000 per month during the past year because they are not protected by Ofgem’s energy price cap.

Last month, ministers promised a one-off payment of £100 to heat network customers as part of the Alternative Fuel Payment scheme, which also provides support to households that are not on the gas grid. This was doubled in the Autumn Statement to £200.

However, following the statement, Government officials informed the industry that heat network customers would no longer receive this support.

A heat network is a type of heating system, also known as district heating, where heat is generated at a central source and transported to multiple buildings via pipes carrying hot water. It is different to heating in a typical household, which generates heat using a gas boiler in the home.

Roughly half a million people in the UK live in homes connected to heat networks, most often cities and large towns.

The senior woman holding gas bill in front of heating radiator. Payment for heating in winter.
Ministers backtracked on a promised one-off payment of £100 to heat network customers as part of the Alternative Fuel Payment scheme (Photo: Marina113/Getty Images/iStockphoto)

At present, heat networks are unregulated, meaning households are not protected by the energy price cap. Because the energy for heat networks is purchased as part of commercial arrangements, households are also not covered by the Government’s new Energy Price Guarantee, which limits bills to an average of £2,500 a month this winter.

As a result, many heat network customers have seen huge increases to their bills over the last year.

Richard Clapton, 32, lives in a 300-flat development in Leyton, east London, which is connected to a heat network.

The amount his development pays for gas has increased from 6p/kwh last year to 32p/kwh this year. For Mr Clapton, this means his heating bill has increased from £50 per month to £250 per month. He said a neighbouring family had seen their bill increase from £100 per month to £1000 per month.

Mr Clapton, who is director of the estate’s residents’ management company, said it was “incredibly frustrating” that the Government would provide the additional money through the Alternative Fuel Payment, and that he and his neighbours “feel like we’ve been forgotten about for the last year or so anyway”.

Many heat network customers have seen huge increases to their bills over the last year (Photo: PA)

He said: “Lots of the residents have been talking about how we’re going to get this £100. Because I’m a director of the estate that means now I’m going to have to go and tell everybody that we’re not going to be getting this support.”

In its letter to industry, the Department for Business, Energy and Industrial Strategy (BEIS) said heat network customers would see a reduction in their bills due to the Government’s Energy Bill Relief Scheme for businesses, which will cover the companies that buy energy for heat networks. The Government has legislated to ensure businesses pass these savings onto heat network customers, which it said would save households £400 this winter.

However, Stephen Knight, chief executive at Heat Trust, the consumer protection body for heat network customers, said: “The problem is that that discount still only brings the gas price down to something like four times what it was a year ago, and that means that even with the discount passed on, heat network customers are still paying roughly twice as much as someone with a gas boiler.”

In Mr Clapton’s case, the 32p/kwh charge came into effect after the Government’s cap for businesses came into place. Furthermore, residents of the development were told their rate will increase to 61p/kwh after the Government support for businesses ends in April. Mr Clapton said that if this happened, he would not be able to use hot water.

Mr Knight said he had seen other heat network customers facing bill increases of up to 1,000 per cent. These households had been “badly left out of price protection over the last year” and that the £100 payment from the Government was seen as “recognition of the fact they’ve been so badly treated”.

More on Energy Prices

He said: “In my view, it was a rather meagre amount to start with, but to have it snatched away when it’s been promised is a real kick in the teeth for hard-pressed customers who have frankly been left out in the cold for the last year.”

Officials also promised industry that “a more appropriate route to deliver bespoke support” to heat network customers over the long term would be brought forward, with more details to be published “shortly”.

Ruth London, from the group Fuel Poverty Action, said: “Yet again people on heat networks are Cinderellas in terms of protection and support. The government has said they will be announcing a policy, but with no indication of what, or when. They are treating this as an optional extra, when in fact it could be a matter of life and death, and the high cost of heating will certainly wreck many families’ quality of life. Some fear losing their homes. The sheer injustice is intolerable.”

A BEIS spokesperson said: “We understand this is a difficult time for households and businesses, which is why the government has committed to delivering energy bills support to those consumers on a heat network through both the Energy Bill Relief Scheme for heating and the Energy Price Guarantee for electricity. This is on top of heat networks customers receiving £400 off their energy bills this winter, with Government recently passing legislation that ensures private network suppliers are obliged to pass on savings to residents.”

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