Recovering the costs of heat networks regulation
Download the full outcome
Detail of outcome
Based on the response to the consultation, in forthcoming legislation we will progress with Option C:
- Ofgem’s and Citizens Advice’s total ongoing costs of regulating the heat networks, gas, and electricity markets to be spread evenly across heat network, gas, and electricity consumer bills.
There will be continued opportunities for engagement on cost recovery as BEIS develops the policy, and when Ofgem consults on its cost recovery principles at the set-up phase.
As set out in the 2020 consultation document, we anticipate that there may be grounds for transition arrangements for some aspects of the Market Framework. We will inform industry of the nature and duration of transition arrangements once we have a proposal, and stakeholders will be able to provide their views. We continue to encourage parties to follow existing good practice ahead of the introduction of statutory regulation, such as that set out by the Heat Trust and the ADE-CIBSE Code of Practice.
Detail of feedback received
We received 25 responses to the consultation. A diverse range of stakeholders provided their views, including:
- local authorities
- trade associations
- energy service companies (ESCOs)
- energy network companies
- consultancies
- consumer advocacy organisations
- small, medium and large businesses
- individuals
Of the 25 responses, 84% of respondents agreed with our proposed approach. Nearly 70% of respondents agreed that our proposal would ensure that the costs of regulation are affordable for heat network consumers and businesses.
Original consultation
Consultation description
This consultation seeks views on the government’s proposed approach to recovering the costs of heat networks regulation.
We propose that Ofgem and Citizens Advice’s total ongoing costs of regulating and performing consumer advocacy functions in the heat networks, gas, and electricity markets should be spread evenly across heat network, gas, and electricity consumers.
The consultation also sets out considerations and seeks views on the design and operation of the proposed approach to cost recovery, which will be administered by Ofgem as future heat networks regulator.
The consultation document includes an analytical annex which provides an overview of our latest estimates of the cost of regulating the heat networks market and new estimates on the associated consumer-level bill impacts of the options assessed.
The consultation will be of interest to the heat networks industry and those with a broader interest in the decarbonisation of heat, including:
- industry trade associations
- energy supply companies
- electricity and gas distribution network operators
- local authorities
- housing associations
- consumer advocacy groups
Read the BEIS consultation privacy notice.
Please do not send responses by post to the department at the moment as we may not be able to access them.
Documents
Last updated 16 June 2022 + show all updates
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Government response published.
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First published.