Home buyers should check who is supplying their energy
There’s good reason because should you spot names like ‘heat network or ‘district/communal heating’, be warned there could be trouble ahead and no escape either.
The system, a lower-carbon alternative to gas piped in by local generators to neighbourhoods, estates and apartment blocks, has the laudable purpose of cutting emissions.
It now supplies a growing number of households, about 450,000 at present, through some 14,000 networks. By 2030 20 per cent of households are expected to be in networks.
But the unlike the main energy market that is regulated and tasked with protecting the interests of consumers, these systems aren’t and some don’t stand up well to scrutiny.
They’ve come in for a lot of criticism over how they are run at the consumer end and the potentially poor deals some offer – not least because customers are left in the dark as to what they’ve been signed up to.
Main drawbacks include long contracts (20 years or more) that rule out any consumer choice about switching, lack of transparency over who runs what, delays in billing and unclear statements that mask whether charges and prices are fair and competitive, and whether a system is being run as efficiently as it could be.
There are also serious questions for estate agents and developers over how heat network properties are marketed and whether prospective buyers are sufficiently informed.
Following concerns about price, quality and service, Government-watchdog the Competition and Markets Authority (CMA) has announced what needs to be done to improve the system.
Its study raised concerns about design and build where where developers put solutions for planning requirements ahead of customers’ ones and cut upfront costs of installing a network. This has led to higher operating ones with customers footing the bill.
The CMA also highlighted worries around monopoly of supply and poor transparency. It’s final report now recommends regulation through Ofgem, that more clarity is introduced about agreements between operators and customers, those who pay know what they are paying for, and developers are prevented from using cheaper options to meet planning regulations that customers ultimately pay for.
Its moves have been welcomed by both Citizens Advice (CA) and consumer group Which? both of whom are calling for tougher action.
CA’s chief executive Gillian Guy said: “We need a regulatory regime that is fit for purpose. That means transparency over billing and price, the same level of consumer protections as other energy customers and measures to remove the enormous price differences experienced by some heat network customers.”
The changes will however take time to come into force and won’t be backdated.
Those in district and community systems with suppliers belonging to the voluntary Heat Trust scheme can take their complaints to the Energy Ombudsman, but its powers are limited.
Those in council housing or an association can go to the Housing Ombudsman.
Main drawbacks include long contracts and unclear statements that mask charges
But that leaves those in private developments with very few options save trying to negotiate and persistent complaining both to the company. Crusader has received numerous complaints from leaseholders who had not received a bill for well over a year, are still not confident whether what they have got is accurate or an estimate, find it difficult to know if their charges and unit prices are competitive and did not have the system explained to them before they moved in.
Concerns about getting into conflict with the managing agents of their blocks and in charge of the schemes deterred them from speaking openly.
WHAT NEW BUYERS MUST ASK BEFORE COMPLETION
Don’t assume your estate agent will tell you, so check:
Is the energy supply part of a heat network?
Is that supplier part of the Heat Trust scheme?
Who is your contract with?
Who sets the unit prices and charges, how are they calculated?
Are they market competitive and how do they compare to the wholesale price of the contract? THIS IS KEY AS IT WILL TELL YOU HOW MUCH YOUR MANAGING AGENT IS MAKING FROM THE DEAL
How long is the contract?
Can homeowners switch?
Can the leaseholder be present when the meter is first read?
How regularly will detailed bills be supplied and who deals with those?
What is the complaints process and redress for poor service
FOR THOSE IN A SYSTEM AND FACING PROBLEMS CITIZENS ADVICE RECOMMENDS:
What rights have you if you don’t get a bill or the calculations are unspecified?
General consumer protections will apply. Consumer Rights Act 2015 – as the supplier of a service, your heat network provider will have certain legal obligations.
The Consumer Rights Act 2015 says the supplier has to provide the service with reasonable care and skill, for a reasonable price and within a reasonable time. It also has to comply with any information about the service or supplier. The Act also covers fairness of terms. Price can’t be assessed for fairness but if there were other terms of the contract that seemed unfair then these could be raised as part of a complaint.
If you don’t get a bill you still have to pay for what you’ve used, it should be clear what you’re paying for and you should pay a reasonable price.
What do you do if you have a problem with a bill
First steps: establish who your contract is with. Check your rental agreement or the paperwork from your purchase.
Some heat suppliers may outsource things like billing, so it’s important to check. You will have an individual contract with the heat supplier – the contract can vary depending on whether the heat supplier can record how much heat you’re using, whether it’s paid as part of rent or service charge, or includes any landlord costs.
If you are unhappy, you will need to follow the company’s complaints procedure. Make sure that you keep copies of all paperwork and any letters or emails which you have sent and give the supplier a deadline to respond.
If you reach the end of the complaints procedure and are not happy, your heat supplier should tell you or not whether they are part of an alternative dispute resolution scheme (ADR). The following is a list of bodies you may be able to complain to depending on who is the heat supplier.
They can be:
Supplier local council: ADR body the Housing Ombudsman,
Supplier Housing Association: ADR body Housing Ombudsman
Supplier private landlord: ADR body landlords who don’t use a letting agent aren’t required to join an ADR scheme. Under the ADR regulations landlords who are members of a scheme must give consumers with unresolved complaints the details of a suitable ADR scheme and say whether or not they are willing to use the scheme. They may choose to join the Housing Ombudsman.
Supplier Heat Trust member: ADR body Ombudsman Services: Energy
++ If you’ve been affected by this issue or feel you’ve been a victim of injustice, please contact Maisha Frost on [email protected] ++