Introduction

The Heat Network (Metering and Billing) Regulations 2014 came into force in December 2014 with other deadlines for compliance being phased in.  The Regulations apply to operation of district heat networks, which distribute thermal energy for heating, cooling or hot water to multiple buildings, and to operation of communal heating systems, which distribute heat from a central source in a building occupied by more than one final customer.  It is the latter which will be more regularly encountered.  A heat supplier is someone operating either system who sells heat to the end user; the final customer.  The Regulations create new obligations to be complied with by heat suppliers.

Notification

Heat suppliers must notify the National Measurement Office by 30 April 2015 of various details including the location of their district heat network or communal heating system and the number and type of buildings and final customers.  This notification must be updated every four years. 

Installation of Meters

Where there is more than one final customer the heat supplier must install meters to measure accurately the consumption of heating, cooling and hot water by each of them.  This more onerous obligation comes into force on 31 December 2016.  If it is not cost effective or technically feasible to install these meters then (unless, again, not cost effective and technically feasible) the heat supplier must instead install a hot water meter and heat cost allocators and thermostatic radiator valves on each radiator to enable the final customer to control their heating consumption.  If existing meters are replaced, they may need to be upgraded if they do not meet the requirements of the Regulations.  The relevant factors in considering whether it is cost effective or technically feasible are set out in a schedule to the Regulations and the results of the analysis must be included in the notification to the National Measurement Office.   

Billing

Where meters, heat cost allocators or thermostatic radiator valves are installed, the heat supplier must bill the final customer accurately based on actual consumption and in compliance with the minimum information requirements set out in the Regulations.  This moves way from charging for heat supplies by reference to floor areas, which is often the case in multi-let buildings.

Enforcement

The Regulations put in place parts of the European Energy Efficiency Directive relating to the supply of distributed heat, cooling, and hot water.  Accurately measuring consumption may incentivise end users to use less thermal energy.  Whilst there are some exemptions, the Regulations will apply to many multi-let properties, for example, shopping centres and multi-let office blocks.  Non-compliance can result in civil penalties and, in certain circumstances, a criminal offence.

Action

Landlords will want to review their portfolio and consider whether the Regulations apply.  Meter installation can be avoided if it is not cost effective, but this needs to be reviewed every four years when an updated notification must be provided to the National Measurement Office.  Although landlords face the potential hassle and cost of compliance, most well drafted leases will allow recovery of the cost of meter installation via the service charge on the basis of statutory compliance.