Legal claim investigated on behalf of heat network energy customers

Customers who receive their heating by means of a heat network are not protected by the energy price cap which is set by Ofgem to stem a spike in household fuel bills. In this context, during the current energy price shocks some heat network consumers have been hit by price rises as high as 700 per cent.

Law firm Leigh Day is currently undertaking research to establish how widespread the issue of excessively high charges is. It is also investigating the quality and efficiency of heat networks where excessive heat losses and other problems mean customers end up paying much more than they should for the service they receive.

Heat networks typically generate heating in an energy centre which is distributed via insulated pipes to multiple dwellings, usually blocks of flats.

Seven years ago, almost 500,000 households were known to receive their home energy by heat networks and it is believed that the growth in apartment living means the figure is now far higher in 2023.

In 2017-18 the Competition and Markets Authority recommended that heat networks be regulated so that the protection available to consumers with a domestic gas boiler is extended to heat network users. However, to date that has not happened and the lack of regulation means that the energy price cap set by Ofgem is currently not applicable to heat-networks.

In June the London Mayor called for urgent action on the matter and stressed that the majority of people exposed to huge price rises in heat networks , are lower-income housing tenants and private renters who are more likely to bear the greatest impact by the cost of living crises. 

The Government has announced support for business energy bills which includes operators of heat networks. However, whilst this offers some protection to customers of heat networks, it does not deliver the same protection as that given to consumers of the conventional gas market. Neither does it address huge energy price rises which have already affected heat network consumers this year.

It is hoped that the Energy Security Bill will include measures to regulate heat network pricing to customers, but it is in its early stages and in the meantime customers affected by unregulated pricing may have a legal claim.

Leigh Day solicitor Leo Gonzalez says affected customers may have grounds for a legal claim under:

• Breach of contract: if pricing mechanisms are not being applied correctly or if their fairness can be challenged under consumer protection rules;  if the quality and efficiency of heat networks breach the standards of service required by applicable contracts, leading to unnecessary higher prices.
  
  
• Competition law: given that consumers of heat networks are typically not allowed to change their provider, as it is the case in the conventional heating/gas market.

Leigh Day solicitor Leonardo Gonzalez said:

“It is concerning to read reports of enormous price increases hitting heat network consumers, often already overstretched by the cost-of-living crisis. I believe there are legal avenues that could be explored to offer some means of redress to these consumers who feel unprotected and powerless in this unregulated sector.”