Insights

Unpacking recent transitional arrangements to 2014's Heat Network (Metering and Billing) Regulations.

The Heat Network Regulations were introduced in 2014 with goal of raising tenants’ awareness of the amount of heat they are using, in the hope that this would lead to them making effort to reduce their heating costs and associated emissions.

While the principles behind the regulations are simple, implementation is often difficult – and so the regulations have not had much impact. Recent amendments to the regulations have sought to rectify this and also make them legally enforceable after a transition period ends in September 2022 – just five months’ time. This means that, by September, applicable networks should have been identified, assessed and had appropriate metering installed.

What they cover.

The regulations cover district and communal heat networks in England, Scotland, Wales and Northern Ireland. This includes residential, commercial, industrial, public sector and other networks. The regulations also class cooling and domestic hot water to be a type of heat and these systems are therefore also within scope. The regulations place various responsibilities on anyone supplying and charging for heating, cooling or hot water and importantly this includes those who bundle heat and cooling costs within rent or service charges.
What you need to do.

The first step is to install a building level meter in every multi-occupancy building with distributed heating or cooling energy. This is a mandatory requirement that has been in place since 2014 when the regulations came into force and is not contingent on any prior assessment of suitability.

Secondly, a 2020 amendment to the regulation introduced the concept of ‘building class’ which determines the level of metering required for each type of building, in addition to this building level meter. These three classes are ‘viable’, ‘open’ and ‘exempt’. All buildings in scope of the regulations must be correctly classified into one of these groups. This means that suppliers may have different final customer metering requirements for different buildings on the same district heat network.

These building classes are summarised below:

The ‘viable’ class applies to any newly constructed or major refurbishment building. For this class, final customer meters are always mandatory.

The ‘exempt’ class applies to buildings which pre-date 27/11/20 AND qualify as one of the following:

– purpose-built student accommodation (PBSA) or alms housing

– entirely heated/cooled by VRF

– at least 10% of the NIA is covered by an existing lease that prevents billing based on actual consumption

For this class, there is no requirement to install final customer metering devices but the Office of Product Safety and Standards (OPSS) may request evidence that a building falls into the exempt class.

The ‘open’ class applies to all other existing buildings which don’t fall into the viable or exempt classes, including those built during the transition phase (27/11/20 – 01/9/22). For this class, meters are required if it is assessed to be technically feasible and cost-effective. Surveys are typically required for these assessments which, if deemed unfeasible, must be reassessed every four years.

Once they are installed, notifications that the meters are continuously operating, and properly maintained and checked for errors, must be updated at least every four years.
Exemptions for producing bills.
If a building has a compliant metering system but the cost of producing bills is over £92/yr per final customer then bills need not be produced. Details on how to calculate this cost can be found in the link below.

Next steps.

Property owners should have completed the class determination, technical feasibility and cost-effectiveness assessment for all buildings in the open class by the first deadline of 27/11/2021. While this was an obligation, not meeting this deadline did not constitute an offence, however it does leave the building owner at risk of missing the second deadline.

Heat suppliers must comply with all amended and new requirements by the second deadline of 01/9/2022. For open class properties, where it is deemed not technically feasible and cost-effective to install heat meters but cost-effective to install heat cost allocators (HCAs), thermostatic radiator valves (TRVs) and hot water meters, the property owners must do so by this second deadline.

While the stipulations may seem a little complicated at first, they simply need a bit of close attention – and in this case it’s very much better to navigate than ignore.

For tenants.

Being aware of these regulations can really help discussions with your landlord. Making sure they are aware of their obligations can help you determine how to reduce your energy bills and track your route to net zero carbon.

Further information.

Tools to assess feasibility and associated guidance are available here.

For help with Heat Network Regulation-related enquiries, contact Zygi Kadziulis or John Pirouet.