Commons Sense

House of Commons · Westminster Hall

Energy Price Cap: Residential Buildings with Communal Heating Systems

20 April 2022 · 7 other contributors · 7,167 words

Opened by Meg Hillier Labour (Co-op) Hackney South and Shoreditch

Responding minister: Greg Hands

HousingEnergy

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

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 points

  • The energy price cap does not protect residents in residential buildings with communal heating systems, leaving approximately half a million people vulnerable to significant price increases.
  • Constituents are facing usage fee hikes of up to 103% this month, with some experiencing increases of over 700%.
  • Peabody reported energy costs have increased by over 300% since April 2021 for housing association residents, who make up around 150,000 of those affected.

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.

Opened the debate

Meg Hillier Labour (Co-op) Hackney South and Shoreditch

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.

Other contributors (7)
  • 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.

  • Matthew Pennycook Lab 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.

  • Nickie Aiken

    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

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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