EVORA Heat Network Regulations Blog November 2016

Legal Update: Heat Network Regulations

The Department for Business, Energy & Industrial Strategy (BEIS) has confirmed that no regulatory action will be taken for non-compliance with key requirements set out in the Heat Network (Metering and Billing) Regulations 2014; namely, in relation to ‘heat suppliers’ testing whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fitting them by 31 December 2016.  However, it must also be noted that the remaining requirements in the regulations are unaffected (for example in relation to installation of heat meters at newly constructed buildings).

BEIS does, however, intend to launch a public consultation on a new cost effectiveness tool and accompanying regulatory amendments in early 2017.

About the Heat Network Regulations

A heat supplier obligated under the regulations is defined as a person (or organisation) who supplies and charges for the supply of heating, cooling or hot water to a final customer, through either communal heating or a district heating network.

Whoever is supplying the end user with heat is classed as a heat supplier. This includes the supply of heat as part of a package – i.e. through a service contract. The contract does not need to explicitly mention the supply of heat. Shared / multi-let offices and shopping centres where heating and/or chilled water is provided to more than one tenant in a building are identified as obligated examples within the guidance document.

Requirements

Heat suppliers were required to notify the National Measurement Office of the existence of heat networks by 31st December 2015.

In addition to notification, heat suppliers were required to test whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fit them by 31 December 2016.

Regulatory Update

The cost effectiveness tool is currently being revised by the department for Business, Energy and Industrial Strategy (BEIS). Therefore, pending the revision of the tool it is advised that no further assessments should be undertaken.

“The Financial Conduct Authority (FCA) has confirmed that it would not be appropriate for them (the FCA) to impose fines or other disciplinary measures in respect of a breach of the requirement within the heat network (metering and billing) regulations 2014 (as amended), that certain heat suppliers must test whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fit them by 31 December 2016.”

“Furthermore, it is unlikely that the FCA would take other regulatory action (where a heat supplier was separately regulated by the FCA) if the only non-compliance was in relation to the requirement to test for and fit meters where cost effective. As such, it is not considered necessary for a heat supplier to inform the FCA if it has been unable to meet this requirement.”

What next?

Following a planned public consultation, BEIS intend to launch the new cost effectiveness tool and accompanying regulatory amendments later in 2017.

EVORA will be watching updates on regulatory amendments in 2017 and can assist you in maintaining your compliance.

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Questions? Please don’t hesitate to get in touch.


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