Last Friday, BEIS (finally) not only published their response to the Heat Network Metering and Billing consultation, but also laid the new regulation before Parliament. It will come into effect on 27th November and, with potentially unlimited fines for non-compliance, is something that all social housing providers need to pay attention to.
The headlines are good news with some key changes on areas Chirpy Heat was lobbying hard.
The first of these is that we have a longer timeframe for compliance. The whole sector – and probably Government as well – realised that the original 6-month timeframe was impossible to meet. The new schedule comes in two parts. All heat network operators must determine whether it is cost effective to install meters at their sites in the first 12 months. All the installs must then be done – and the sector must be fully compliant by – September 2022.
In order to determine if homes need meters, housing providers will need to complete an assessment and to help this BEIS will be providing a ‘cost effectiveness tool’ which will be released on the OPSS website on 27th November. BEIS has said they will also be providing advice and running some workshops too. The impact assessment that accompanies the Government response indicates that, due to an adjustment in the costs used in the tool, fewer schemes will be deemed cost-effective: they estimate it could be as low as 14% of all currently unmetered heat networks. Completing the cost effectiveness tool may take time, but it could save you money in the long run. Inevitably there will be some data challenges to complete the assessments – some of it will be at your fingertips but other information might need to be collected from site.
The second big change is that it looks as if more heat networks are now exempt from meters altogether, recognising that there are some situations where the benefits of meters would not be realised. These include:
- Supported social housing, almshouse accommodation or purpose-built student accommodation
- Where the existing lease contains provision which would prevent billing based on metered consumption
The definition of ‘supported housing’ is fairly wide. Critically, it includes “sheltered housing or extra care housing providing additional support for residents”. What is not clear is what exactly is meant by ‘sheltered housing’. Would it include for example all schemes for older residents (say, 55+)? What does ‘additional support’ look like? Does it count if there’s just an emergency pull cord but with no (or perhaps only a peripatetic) warden? If this wide definition of supported housing is adopted, it will exclude wide swathes of our older communal-heating schemes. The devil will be in the detail and again we await clarity from OPSS.
It’s also worth noting that new supported housing schemes don’t automatically have to have meters installed. They too will be subject to a cost-effectiveness determination at design. Also, if you have general needs or other schemes where meters are installed but you’re still apportioning costs, this must also change: these customers must be billed on consumption – BEIS estimates this accounts for 13,000 customers across all heat networks.
There’s also a clear reminder in the Regs that all heat network schemes must be notified to OPSS on a 4-yearly basis. This includes all your communal heat schemes, whether they’ve got meters or not. The notification template will also be updated to include your cost-effectiveness determination.
So what are the key steps to remain compliant?
- Keep up to date with developments, particularly when the final details and tool is launched on 27th November and book yourself onto one of the OPSS workshops.
- Get a full list of all your unmetered heat networks, regardless of tenure or whether they’re sheltered or temporary accommodation, etc – they all need to go on your OPPS notification. Assess which you would deem ‘supported housing’.
- Find out if you’ve got any schemes that are metered but heat costs are still part of the service charge. Unless it’s specified in the lease or they’re supported housing, these customers need to billed on consumption and brought into your billing contract.
- Roll your sleeves up and start gathering and entering the data for your ‘viable’ schemes – the ones where you need to determine whether its cost effective to install meters or not. This is likely to be a team effort across your organisation so get an internal working team together. They will also become your allies as you begin to build programme of works where meters have to go in. In the longer term you’ll also need to think about procurement, funding and customer communications…
- Reach out for support in the sector. We’re all expanding our capacity so we can support you. Whether it be for the cost-effectiveness assessments, developing a metering strategy or financing the meters through a leasing model, Chirpy Heat can help – drop us a line at firstname.lastname@example.org and we’d be happy to have a chat!