Ofgem
Next to speak were Mike Leonard and Gareth Gill of Ofgem, who discussed the energy watchdog’s future role as heat networks’ regulator – their remit and how this may evolve.
They told the round table about their work with the Scottish Government and Consumer Scotland on the regulatory framework – derived from the Heat Networks’ (Scotland) Act, 2021 and shared that Ofgem will take on the licensing authority role for potential heat network suppliers and operators.
They highlighted that the watchdog’s core duty is to protect consumers, with their regulatory activities including: monitoring & consumer research, consumer protection, pricing, technical standards, and metering and billing. Their evolving approach to consumer protections, includes standards of conduct principles, proposals for protecting vulnerable consumers, fair and transparent pricing, and step-in measures in the event of supplier failure.
The following points and questions were discussed:
- The Standards of Conduct overlap with the consenting regime’s fuel poverty statement requirement – how can these be brought together?
- How “fair pricing” can best be defined, and how fair pricing incorporates the start-up and long-term costs of heat networks.
- Whether fuel poverty might be exacerbated by the move to a heat network with a higher energy source cost, e.g. electricity.
- Decarbonising existing networks may well drive-up costs.
- The challenge for Ofgem of running a third regulatory system (electricity & gas and now heat networks) and how these will interface.