Heat Network Regulations Update

Friday 2nd December 2016

We have posted previously about the Heat Network Regulations, which were issued in order to meet aspects of the European Energy Efficiency Directive. They affect any building where a heating network is shared by more than one final tenant. The aim of the Directive is to provide incentives to both tenants and landlords to increase heating performance within buildings like this. In many cases, the current set-up where the Landlord's bill is based on percentage floor area or other measure, does not encourage tenants to cut down on heating use. They have no data to show whether changes in behaviour affects heating use, and if they are able to increase their performance, then the benefit is reduced by being shared across all tenants, rather than being felt solely by them. Installing heat meters so that heating is charged based on usage should also drive demand for Landlords to provide better controls and other energy saving measures.

The regulations were originally published in 2014 with deadlines for organisations to:

  • Report their heat network details to the regulator by 31st December 2015
  • Install any heat meters or heat cost allocators assessed as being ‘required’ by the assessment tool issued by the regulator, by 31st December 2016, along with a number of other measures relating to the way that bills are issued.

However, since very early in the process the regulator admitted that their assessment tool was not adequate, and withdrew it. Without the tool it was therefore impossible to say for sure who would be required to install heat meters, and who would not. Although the December 2016 deadline remained formally in the regulation, all informal communication from the regulator was that they were going to push this back, as they were not in a position to meet it themselves, let alone expect Landlords to comply.

Last week the new regulatory department, ‘Regulatory Delivery’ under the new Department for Business, Energy & Industrial Strategy, which has now replaced DECC, issued a statement to say that they are working towards launching a public consultation in early 2017 on a revised methodology for assessing whether heat meters need to be installed.  They have therefore said that no disciplinary measures will be taken against organisations who have not met the deadline for end of 2016 and that the regulations will be amended later in 2017 to change the deadline.

I would not expect the new deadline for installing meters to be set before 2018; there have been delays with settling the regulation with a particular team after DECC was replaced, and there will need to be at least a year following the release of the new assessment tool to allow landlords to schedule fitting of the required meters and allocators.

We will be looking out for the release of the consultation in early 2017 in order to update our clients further.

Abby Davey, Head of Compliance