The UK government and Ofgem recently ran two consultations on the future regulation of heat networks: the Heat networks regulation: authorisation and regulatory oversight and Heat networks regulation: implementing consumer protections. Their goal is to establish fair pricing, service reliability, and robust consumer protections as the sector grows.

We outline our response to these proposals and highlight areas that need further refinement to ensure the best outcomes for consumers.

Getting heat network regulation right to protect consumers and build trust

Heat networks, along with air source heat pumps, are central to the UK’s plan for decarbonising heating. In cities, they offer the cheapest, lowest-carbon way to heat homes, and the government’s intention is for them to gradually replace gas boilers in most urban areas.

A heat network is a system of insulated pipes that transports heat (and sometimes cooling) from a central source to nearby buildings. These networks often use waste heat from industry or renewable sources—making them potentially zero carbon.

While common in Europe, heat networks are relatively new to the UK. With up to £80 billion in planned investment by 2050, regulation is essential. Currently, the sector is unregulated, which is why CSE welcomes Ofgem’s proposals to improve consumer protection and service standards.

Proposed regulations

The new rules aim to give heat network consumers the same protections as gas and electricity customers. Ofgem, as the proposed regulator, would ensure:

• Fair pricing.
• Reliable service.
• Clear complaints procedures.
• Consumer redress for poor service (clear routes for complaints, compensation and disputes if standards are not met).
• Safeguards for vulnerable households.

Operators (who maintain networks) and suppliers (who provide heat) will have distinct responsibilities. Key measures include performance guarantees, network efficiency reporting, and emergency contingency plans. Ofgem will have the power to intervene in cases of unfair pricing and enforce consumer protections.

Why strong heat network regulation is essential

Heat networks are natural monopolies – each heat network zone will be served by a single operator, with no competition to drive down prices or improve service.

A bit like our water companies, once people are connected to a heat network, they will have little option but to accept the charges levied for the heat they use, unless they spend thousands to switch to gas or a heat pump.

Plus, new regulations mean that in some areas new buildings will be required to be on a heat network.

Consumers will not have a choice, so the regulations must ensure that networks are well run, competitive and fair, and be seen to be so. They cannot be allowed to fail because once connected, customers are entirely reliant on them.

This is a critical opportunity to prevent heat networks from suffering the same fate as the UK’s water companies, where public confidence has plummeted due to excessive profit extraction.

CSE’s recommendations for stronger protections

While we broadly support Ofgem’s proposals, we see practical improvements that will ensure heat networks work for consumers while remaining financially viable.

Cost and carbon transparency

Many households won’t have a choice about being on a heat network, so transparency is crucial. Consumers need reassurance that lack of competition won’t mean higher energy prices.

People might think, probably inaccurately, that they are paying more, whereas in reality heat networks have significant potential to shelter customers from volatile gas markets. Our response suggests that:

• Billing should compare costs to gas heating, showing potential savings.
• Bills should highlight emissions data, showing the carbon savings of heat networks.

Preventing a postcode lottery on costs

Ofgem proposes allowing operators to set charges based on network operating costs. While it might sound reasonable, this risks a postcode lottery, where some households pay more simply because their network is inefficient.

We believe the regulator should benchmark costs and require cost reduction plans for poorly performing networks.

 Areas with high deprivation could see higher levels of bad debt, unfairly pushing costs onto struggling households. Unlike electricity providers, heat networks lack a national customer base to spread the burden. Government must explore ways to socialise bad debt across multiple networks.

Debt recovery and right of entry

The regulations propose operators could gain right of entry to recover debt from households owing just £200 for 56 days—far too low, particularly in winter when many households fall into temporary debt.

• The threshold must be raised to allow time for repayment plans to be arranged.
• Disconnections must be a last resort, only after the household has been referred for financial support.

Advice organisations can often resolve debt issues on behalf of clients, removing the impetus for forced disconnection. Strengthening these safeguards is essential.

Ensuring a reliable supply

If customers can’t opt out of the heat network, they must be able to trust that it won’t fail.

• Operators must submit robust contingency plans for service continuity.
• The government may need a public sector step-in body to take over failed networks.

The consultation also suggests giving operators the right to refuse new connections. This risks excluding vulnerable customers, leading to unfair outcomes. We believe operators must connect all eligible buildings in designated heat network zones, where feasibility has already been assessed.

Fairness must be embedded from the start

These regulations are a vital step toward fair pricing, reliable service, and strong consumer protections for heat network users. But fairness must be built into regulation from the start to prevent discriminatory treatment for people with no other choices for heating.

With consumers locked into these networks, regulations must prevent exploitation and ensure heat networks deliver on their promise of affordability and decarbonisation.

This is an area where better regulations are overdue and we strongly welcome regulation that will help professionalise the heat networks sector and start to standardise how consumers are treated.