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Energy Price Cap: Residential Buildings with Communal Heating Systems
20 April 2022
Lead MP
Meg Hillier
Hackney South and Shoreditch
Lab Co-op
Responding Minister
Greg Hands
Tags
HousingEnergyBusiness & TradeBenefits & WelfareLocal Government
Word Count: 7167
Other Contributors: 7
At a Glance
Meg Hillier raised concerns about energy price cap: residential buildings with communal heating systems in Westminster Hall. A government minister responded.
Key Requests to Government:
The Government should introduce legislation regulating heat networks during the current Parliament, preferably in the upcoming Queen's Speech, to provide urgent support to residents facing significant energy bill increases. Additionally, targeted financial support for housing associations covering expected rises in energy bills would help create a level playing field for residents of the same landlord who often have different energy costs.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
The energy price cap does not protect residents in residential buildings with communal heating systems, leaving about half a million people vulnerable to significant price increases. Constituents are facing usage fee hikes of up to 103% this month and over 700% in the worst cases. Housing association residents make up around 150,000 of those affected, with Peabody reporting energy costs have increased by over 300% since April 2021. The Competition and Markets Authority's recommendation for regulation was made in 2018, yet it has taken years to see progress.
Alan Whitehead
Lab
Glenrothes
He emphasised the need for proper regulation of heat networks, which currently remain unregulated despite their importance in decarbonisation efforts. He also highlighted issues with price caps and suggested potential solutions such as pooled purchasing of gas by district network operators to ensure stability.
Janet Daby
Lab
Lewisham East
In her constituency, there are many Barratt homes with district heat networks. She emphasised the importance of introducing regulation to protect residents from increased fuel costs during a crisis.
Jim Shannon
DUP
Strangford
He thanked Janet Daby for securing the debate and highlighted that Ginger Energy had called for protections for customers using communal heating networks. There are 14,000 heat networks in Great Britain with half a million customers affected by this issue.
Greenwich and Woolwich
Pennycook raised concerns about the lack of consumer protection for customers of communal heat networks, highlighting that statutory regulation is needed as a matter of urgency. He mentioned a case where unit energy charges increased by 367%, urging the Government to provide an immediate stop-gap solution and extend the energy price cap to these customers. He raised concerns about standing and capital replacement charges on privately owned networks, which continue to rise despite increasing unit energy prices, adding an additional burden on consumers.
Residents in buildings with communal heating face a staggering increase of around 300% in their heating bills due to market changes and lack of recourse. We need interim support for those currently excluded from Treasury's comprehensive package of support.
Rushanara Ali
Lab
Bethnal Green and Stepney
She cited an example from her constituency where a junior doctor faced a 400% increase in heating prices, paying £7 more per day. She called for the regulator to encompass such communal heating systems within protections.
Sharon Hodgson
Lab
Washington and Gateshead South
In my constituency, over 1,000 properties are attached to communal heating systems and do not benefit from the energy price cap. The Government needs to bring forward legislation urgently to assist these residents.
Government Response
Greg Hands
Government Response
I begin by congratulating the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier) on securing this important debate. I noted that there were, I think, seven London MPs here, and all of the Back-Bench contributions were from London MPs. My own constituency, of course, is also very affected by this issue, as are other inner-city constituencies.
This Government recognise and understand the pressures people are facing with the cost of living. The Chancellor announced an additional £500 million for the household support fund at the spring statement to help those in hardship, including heat network customers. We introduced revisions to the Heat Network (Metering and Billing) Regulations in autumn 2020, which required a significant expansion in the heat networks required to install heat meters.
We will consider all options on price regulation when introducing new legislation. The energy price cap insulates millions of customers from volatile global gas prices, but those on heat networks are more exposed to these increases because they can ordinarily purchase gas at cheaper prices than individuals. Without the price cap in place, many are now seeing price increases that are far in excess of price cap rises.
To provide immediate support to consumers, including those served by heat networks, the Government have provided a £9.1 billion energy bill support package, including increases in universal credit and warm home discount, as well as a £200 discount on energy bills for all households in bands A to D in England. Local authorities also received £144 million to help vulnerable customers who do not live in band A to D properties.
We have committed to introducing legislation within this Parliament to see Ofgem regulate the heat network industry, securing fair pricing and ensuring that heat network operators secure the best possible purchasing deals for their customers. Heat networks are part of the pathway to decarbonising heat and can supply heating more cheaply than individual gas boilers. We will continue to ensure that prices are as fair as possible.
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About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.