Heat networks regulation: consultation on fair pricing protections

Ofgem are consulting on a new fair pricing framework for heat networks. This consultation comes as part of a new regulatory regime for heat networks to ensure heat network consumers have equivalent protections to other household energy consumers. 

The consultation 

Ofgem’s consultation seeks views on a new fair pricing framework, including its structure, objectives, principles, and a 'fairness test' for implementation. It is also consulting on cost allocation proposals, methods for price and profit comparisons, options for publishing price data centrally, and on their approach to price investigations. The consultation builds on proposals included in the 2023 consumer protection consultation and the 2024 implementing consumer protections regulation consultation. 

This is one of several consultations we are expecting through 2025/26 from the Department of Energy Security and Net Zero (DESNZ) and Ofgem as they continue to design the regulatory regime.    

We are encouraging NHF members to respond to the consultation and share their views on Ofgem’s proposals. Social housing providers are an important stakeholder in these consultations, with around 150,000 housing association households in England connected to a heat network. There is also a relatively higher presence of heat networks in the supported and older peoples’ social housing sector. 

How do the proposals in the consultation affect housing associations? 

The proposals set out in the consultation will affect housing associations. Those who provide heat networks to their residents will have to demonstrate that customers pay reasonable and fair prices that are easy to understand and compare.  

There will also be new requirements to report data and provide customers with price comparisons. The proposals suggest the cost of compensation for consumers should not be met by other heat network customers.  

Ofgem wants to take an approach to regulation that reflects market segmentation and is seeking views on how this should work in practice. This is particularly important for smaller providers or housing associations with only a small number of networks. 

Next steps 

At the NHF, we’ll be submitting a sector response to the consultation and welcome members’ views on how these proposals could affect your organisation and residents. To feedback, please contact us using the details below. We are also encouraging our members to submit their own responses to Ofgem’s consultation.