How To Comply With The Heat Network Regulations

There has been little publicity about The Heat Network (Metering and Billing) Regulations 2014 (as amended by The Heat Network (Metering and Billing) (Amendment) Regulations 2015 and The Heat Network (Metering and Billing) (Amendment) Regulations 2020). The majority commenced on 18 December 2014 and 31 December 2014.

Who Do the Regulations Apply To?

The duties under regulations apply to a “heat supplier”. A landlord is a heat supplier if ALL of the following apply-

• there is a distribution of thermal energy in the form of steam, hot water, or chilled liquids from a central source in a building (e.g. a gas boiler)
• the thermal energy is used to provide heating, hot water or cooling
• more than one final customer occupies the building
• the landlord bills more than one occupier for the heat or hot water that that person has used (or a proportion of).

This type of system is known as “communal heating”. A typical example will be if a communal boiler is supplying heat to a block of flats in a single building.

Domestic HMO Accommodation

The first guidance issued stated that the regulations also extended to “... rented accommodation with a single heat source supplying multiple dwellings including houses converted into flats/bed-sits ...”. In the previous version of this page, it was our view that despite the earlier guidance, where a landlord lets bedsits all-inclusive and does not charge for the heat, the regulations were NOT triggered because there needs to be “more than one final customer”. 

We received comments saying we were incorrect (see the comments below), and we also received an email from BEIS asking us to change or remove this article which we refused until they explained why we were wrong. 

In their email to us, they said:

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. ...

Since then, we have received further communication from BEIS, and they have updated their guidance. It is clarified that in a shared HMO, the regulations do NOT apply (as we maintained throughout, although for slightly different reasons). They go further than we were suggesting, and even if heat is charged for in bedsit lettings (individual tenancies for individual bedrooms), the regulations don’t necessarily apply. 

The updated guidance now says:

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 houses of multiple occupancy or most university halls of residence where some services, such as cooking, are shared are therefore not considered within the scope of the regulations.

It is therefore clear from the guidance that to be a final customer, the dwelling being provided must be fully self-contained with its living and sleeping space, kitchen and bathroom. If there are sharing of facilities, it will not be considered as being within the scope of the regulations. 

The regulations aren’t triggered by electric heating - even if the electricity is billed individually. 

This is because, for the regulations to apply, the distribution of thermal energy must be from a central source in the form of steam, hot water, or chilled liquids.

District Heat Network

There is one other situation similar to the above which triggers the regulations, and a landlord could be a “heat supplier” known as a district heat network:

“district heat network” means the distribution of thermal energy in the form of steam, hot water or chilled liquids from a central source of production through a network to multiple buildings or sites for the use of space or process heating, cooling or hot water;

Duty to Notify

Where the landlord is a “heat supplier”, the landlord must notify the Office for Product Safety & Standards (OPSS). The notification must contain certain prescribed information, including:

• the location of the communal heating;
• the estimated total heating capacity, heat generated, and heat supplied;
• the number of dwellings supplied;
• the number of meters or heat cost allocators installed;
• the number of final customers supplied;
• the name and business address of the heat supplier;

Although there is no prescribed form for this notification, there is a suitable template for this purpose. The notification must be done at least once every four years.

Duty to Install Meters / Heat Cost Allocators

in a building with communal heating, the heat supplier must ensure that meters are installed to measure the consumption of heating, cooling or hot water by each final customer. This only needs doing if it is cost-effective and technically feasible, and there is a tool to help establish whether installing meters will be cost-effective and technically viable. In respect of a shared HMO property, the FAQ accompanying the scope guidance states:

5.4. Do we need to meter every room in a House of Multiple Occupancy (HMO)? Such arrangements are out of scope, if residents share at least one of: a kitchen (or cooking area), a bathroom (including a toilet), and a space for living and sleeping in.

A review of cost-effectiveness and technical feasibility must be done at least once every four years.

Ongoing Duties

Where anything is installed which would be required by these regulations (meters, heat cost allocators etc.), they must be continually operational and properly maintained.

Billing

Where any bill is provided to a final customer, it must be accurate and based on actual consumption. If requested by the customer, the bill must be supplied electronically. The requirements of any bill are contained in regulation 9 and Schedule 2 and include the following criteria-

• at least once a year, the bill must be based on an actual reading (exceptions apply where an estimated reading can be used)
• bills must be issued at least quarterly if provided electronically or at least six monthly otherwise

The invoice must contain certain information, including-

• current energy prices charged to the final customer by the heat supplier;
• information about the final customer’s energy consumption;
• where available, comparisons of the final customer’s current energy consumption from the heat supplier with consumption for the same period in the previous year, if possible, displayed in a graph; and
• contact information, including website addresses, for organisations from which information may be obtained on available energy efficiency improvement measures and technical specifications for products which use energy.

A charge may be made for producing a bill, but no profit may be made from the charge. This is only a summary of the requirements of any bill issued, and the regulations (including the amendment regs.) should be consulted.

New Builds

The regulations contain requirements for new build blocks of flats or bedsits requiring meters to be installed where the heating is to be billed separately.

More Information

The guidance page on the heat networks legislation provides more helpful guidance for landlords who may be affected by these rules.