Heat Network Regulations: Are HMOs affected?
The Office for Product Safety & Standards (OPSS) are the enforcers of The Heat Network (Metering and Billing) Regulations 2014 and is part of the Department for Business, Energy & Industrial Strategy (BEIS). The OPSS has contacted us to assist in spreading the word about the little-known regulations.
While speaking, we asked them to clarify the position of shared houses, mainly whether the regulations apply to a typical HMO on a joint and several bases.
Previous guidance stated that:
The Regulations apply where there is fair expectation for the provision of heat. Therefore, it does apply where the cost of heating is included in the rent. ...
However, we have maintained that the regulations don't apply in the case of a single joint and several tenancy where the landlord pays the bills because there needs to be "more than one final customer" for the regulations to be triggered.
This has caused much debate and even caused the BEIS to contact us previously to change the guidance (which we wouldn't do because we felt we were right).
The OPSS has sent us some text which includes enforcement guidance, and it now shows that this type of tenancy is "not considered within the scope of the regulations".
The full text sent to us is copied below, and we have highlighted the important part for most of our subscribers about domestic shared houses, which caused the most controversy. Our guidance page on the Heat Network Regulations has also been updated.
Heat Network Regulations Overview
Heat networks are shared heating systems which provide a more energy-efficient alternative to domestic boiler heating systems. They incorporate systems where water is heated or chilled at a central source (such as a boiler or plant room) and then channelled to customers through a pipe network for heating, cooling or hot water use.
There are two types of heat networks. Communal networks serve a single building containing multiple customers, such as a block of flats or offices. District networks serve multiple buildings, such as a housing estate or university campus.
Heat networks are very popular in northern Europe but supply only around 2% of the UK’s heat demand.
However, the government is promoting this technology as an essential contributor to its carbon-cutting targets.
The sector was largely unregulated until the Heat Network Regulations, which seek to establish some uniformity among operators in how they bill customers (i.e. according to their actual consumption of heat) while also giving customers an incentive to reduce their consumption.
The Regulations also create the first detailed picture of heat networks in operation throughout the UK.
The Regulations are enforced by the Office for Product Safety & Standards (OPSS), part of the Department for Business, Energy & Industrial Strategy. They place duties on heat suppliers, defined as anyone who supplies and charges for the supply of heating, cooling and hot water to customers through a heat network.
For the purposes of domestic heat supply, a user is considered a final customer where they occupy a partitioned private space intended to be used as a domestic dwelling where it meets all of the following criteria:
- It has a living and sleeping space
- It has sanitary facilities (including washing and toilet)
- It has cooking and food preparation facilities
Spaces that do not meet all of these criteria such as shared houses with a domestic boiler, houses of multiple occupancy or university halls of residence where some services, such as cooking, are shared are therefore not considered within the scope of the regulations. In a non-domestic setting, customers are those with the exclusive use of a partitioned space.
Heat suppliers must: inform OPSS of the details of their networks, install heat meters to measure customers’ consumption (where it is cost-effective and technically feasible to do so), and; use those meters to bill customers by actual consumption.
Heat suppliers should inform OPSS of their existing networks as soon as possible, using the official ‘notification template’.
This asks for information such as the number of buildings and customers on those networks and, for metered networks, the amount of heat generated and supplied.
New heat networks should be identified on or before the date they become active.
A fresh notification form must be completed every four years after that.
Heat suppliers will be required to use a cost-effectiveness tool to determine whether or not they should install heat meters. The cost-effectiveness tool will be released following a planned consultation. Where the tool gives a positive response, heat suppliers will be expected to install meters and begin billing customers by actual consumption as soon as the meters have been installed. Where the tool gives a negative response, heat suppliers will be required to re-use the tool every four years after that.
The Regulations apply across the UK and are enforced by OPSS on behalf of the devolved governments.
The enforcement approach taken by OPSS is always to help heat suppliers achieve compliance, although non-compliance can result in financial penalties. The ‘notification template’ is available at www.gov.uk/heat-networks. This webpage contains guidance on the types of heat networks considered inside and outside the scope of the Regulations, and it also includes a list of frequently asked questions.
The email address to which completed notification forms should be sent is email@example.com.
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