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Full regulation and housing – Getting the insights right

Oct 17, 2023

Nicholas Doyle, Chirpy Heat

In 2024, Ofgem will introduce full regulation that will build on the heat network regulations already in place. This will mean that housing providers will become fully regulated energy suppliers much like British Gas, Ovo and other gas and electricity providers. This will have enormous implication for them and their customers.

To help housing providers to understand what this means for them, Chirpy Heat has created the Regulation Insight Tool© and Your Energy Business Calculator© so they can quickly identify what the regulations mean for them and their customers. By providing some simple information housing providers will receive their own Regulation and Compliance Insights Report, outlining their current position, the scale of their operations including financial risk, the issues they will need to focus on and an action plan for delivery.

A typical housing provider has around 10% of their homes on a heat network. The housing sector alone manages by far the largest number of heat networks in the UK (something over 60% are managed by housing associations and local authorities). If the sector were an energy company, it would be one of the top ten energy companies in the UK. The government sees heat networks as a key tool to delivering low carbon, low cost energy in the future and aims to see the current 2% of homes on heat networks rise to 18% to deliver this.

In August Ofgem launched the first of three rounds of consultation on the regulations – this round focuses on just on consumer protection, with future rounds focusing on the roll out of heat zones and technical standards.

Whilst we are yet to see the details of the future consultations, the first round has already flagged many more requirements than housing and heat network operators are currently dealing with.  These will include, amongst other areas, the following elements:

  • Fair pricing
  • Quality of Service
  • Performance standards
  • Technical Standards
  • Step in arrangements
  • Vulnerable customer arrangements
  • Metering standards and specification
  • Customer communications
  • Scheme monitoring
  • Reporting to Ofgem

With less than 500 days to go before its introduction, preparation will need to start very soon and will need much of 2024 to put in place the management, data and systems to ensure that schemes and housing providers are compliant.

For new schemes and developments on heat networks the challenges are potentially even more urgent. All new homes on heat networks will have to be authorised by Ofgem before they are commissioned. In order to gain authorisation, a whole range of management, performance standards, data and processes will need to be in place to avoid the nightmare of not being able to let properties.

It is clear that whilst much of this will be a challenge the key of course is putting in place a plan. That is why we have worked with housing providers across the country to develop The Regulation and Compliance Insights Report and the tools that lie behind it. The report provides:

  • Background analysis on current and future regulation
  • A clear baseline on where your organisation stands
  • An overview of the operational costs, asset value and financial risk of your heat networks.
  • Information and analysis for internal communication
  • Key actions to begin the journey to full regulation

Our background in housing ensures that the report focuses on what it means for everyone in the sector – asset management, governance, finance, repairs and maintenance as well as development. The aim is to break down the regulations clearly and simply so that they are more understandable, more manageable and critically more deliverable.

The Insights Report gives housing providers clarity and understanding on what regulation means for them and their customers and an important first step in developing the plan to deliver full compliance in the coming months.