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Energy Act 2023

Contents

Part 8: Heat Networks

Chapter 1: Regulation of Heat Networks

Section 216: Relevant heat network

  1. Section 216 clarifies the scope of regulation by defining "relevant heat network", a term used for the purpose of the powers to make secondary legislation detailed in Schedule 18. The definition of "relevant heat network" relies on definitions of "communal heat network", "district heat network", and "heat network" in subsection (2) (and subsection (3) clarifies that ambient loops, that do not have a single heat source, are within the definition of "district heat networks"). Subsection (4) permits the Secretary of State to amend these definitions by regulations subject to the affirmative procedure.

Section 217: The Regulator

  1. Section 217 provides that GEMA will be the regulator for heat networks in England, Wales and Scotland. The Secretary of State may introduce regulations to appoint a different regulator by affirmative procedure. The regulator in Northern Ireland will be the Northern Ireland Authority for Utility Regulation (NIAUR) subject to a similar power to make changes by secondary legislation.

Section 218: Alternative dispute resolution for consumer disputes

  1. Section 218 provides for consequential amendments to the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015. Specifically, it provides the Department for the Economy in Northern Ireland with powers to designate its heat networks regulator as a competent authority with responsibility for approving Alternative Dispute Resolution bodies in Northern Ireland (GEMA is already designated as a competent authority for this purpose).

Section 219: Heat networks regulations

  1. Section 219 provides powers for the Secretary of State to make secondary legislation to regulate heat networks in Great Britain and confer powers relating to the development and maintenance of heat networks in Great Britain. It also provides the Department for the Economy in Northern Ireland with powers to make secondary legislation to regulate heat networks in Northern Ireland and confers powers relating to the development and maintenance of heat networks in Northern Ireland. Further details on what these regulations may provide for are set out in Schedule 18. The section requires the Secretary of State and the Department for the Economy in Northern Ireland to consult with relevant parties before making regulations.

Section 220: Regulations made by Secretary of State: consultation with devolved authorities

  1. Section 220 sets out specific steps the Secretary of State must take when making regulations under the previous section containing provision within Scottish or Welsh devolved competence. The steps include consultation for a minimum period and a duty (if requested) to explain whether and how representations made by the Scottish or Welsh Ministers have been taken into account. The procedure only applies in cases where regulations are made by virtue of Parts of Schedule 18 whose subject matter is considered to be partly devolved.

Section 221: Heat networks regulations: other provision about procedure

  1. Section 221 sets out the procedure for making regulations described in section 219. They are to be made by statutory instrument and the section specifies whether they are to be made by negative or affirmative procedure. For example, a statutory instrument is subject to the affirmative procedure if it is the first of the regulations to be made under this power or if it amends primary legislation.

Section 222: Recovery of costs by GEMA and NIAUR

  1. Section 222 allows for fees paid by electricity and gas licensees to contribute towards costs relating to heat networks. This includes costs incurred by:
    • GEMA, or NIAUR in the case of Northern Ireland, in their roles as heat network regulators,
    • other parties carrying out functions of the regulator,
    • the Secretary of State, or the Department for the Economy in Northern Ireland, in relation to the special administration regime,
    • parties providing consumer advocacy and advice.

Section 223: Heat networks: licensing authority in Scotland

  1. Section 223 provides that the Secretary of State may by regulations appoint GEMA as the licensing authority under the Heat Networks (Scotland) Act 2021. It sets out amendments to that Act which will allow for the appointment to be made through regulations.

Section 224: Heat networks: enforcement in Scotland

  1. Section 224 provides that the Secretary of State may (by regulations) give the licensing authority described in section 223 above the same enforcement powers as those being provided to the heat networks regulator through regulations. However, the Secretary of State may only exercise this power while GEMA is the licensing authority.

Section 225: Interpretation of Chapter 1

  1. Section 225 defines certain terms used in these sections.

Chapter 2: Heat Network Zones

Section 226: Regulations about heat network zones

  1. Section 226 provides powers for the Secretary of State to make regulations about heat network zones ("zones regulations") and describes what a heat network zone is. The section also describes the scope of the regulations and the Parliamentary procedure to be followed.

Section 227: Heat Network Zones Authority

  1. Section 227 provides that zones regulations may make provision for an "Authority" to be established, with responsibility for general functions in relation to heat network zones. The section allows for the Secretary of State, or another person, to be designated as the Authority. The Authority may also delegate its functions to other persons specified in the regulations.

Section 228: Zone coordinators

  1. Section 228 provides that zone regulations may make provision about zone coordinators, including regarding their governance and funding. The regulations may specify how zone coordinators can be established by local authorities acting alone or collaboratively. The section also provides powers for regulations to be made which permit the Authority to perform the functions of a zone coordinator or to direct a zone coordinator to perform any of its functions. The Authority may also require local authorities to designate a zone coordinator or designate a zone coordinator where a local authority fails to do so.
  2. This subsection (5) defines what "local authority" means in the section.

Section 229: Identification, designation and review of zones

  1. Section 229 provides that zones regulations may make provision for the Authority and zone coordinators to identify zones, in accordance with the zoning methodology, and for zone coordinators or the Authority to designate such zones. Regulations may also make provision for zone coordinators or the Authority to undertake reviews of designation decisions.
  2. In particular, the section provides that zones regulations may make provision regarding the procedure for the designation of areas as zones by zone coordinators or the Authority.
  3. The section also provides powers for regulations enabling zone coordinators or the Authority to revoke, vary and review designations subject to criteria and conditions.

Section 230: Zoning methodology

  1. Section 230 provides that zones regulations may make provision for a methodology which the Authority and zone coordinators must follow when identifying areas as heat network zones.
  2. Zones regulations may also make provision for the Authority to issue guidance relating to the methodology, as well as for the Secretary of State to carry out reviews of the methodology.

Section 231: Requests for information in connection with section 229 or 230

  1. Section 231 provides that zones regulations may make provision for the Authority and zone coordinators to request information in connection with their functions under sections 229 (Identification, designation and review of zones) and 230 (Zoning methodology).
  2. The regulations may provide powers for the Authority and zone coordinator to issue notices and impose penalties for non-compliance with requests, as well as making provision to ensure that information requests do not require the breach of data protection legislation or obligations of confidence.
  3. This section also makes provision for zones regulations to provide that zone coordinators may delegate their information requests powers to others, with the regulations to specify the circumstances in which this may be done and any conditions which apply.

Section 232: Heat networks within zones

  1. Section 232 makes provision for certain types of buildings and heat sources within heat network zones to be required to connect to district heat networks in circumstances and within timeframes to be set out in regulations. The section also provides for regulations to make provision for zone coordinators to provide prior notice of requirements.
  2. In relation to buildings which are required to connect, the regulations may provide for exemptions to be granted subject to specified criteria and provide a route for challenging decisions where an exemption request is refused.
  3. In relation to heat sources, the zones regulations may provide that zone coordinators may request information from heat sources and the relevant procedures that are to apply. Regulations may also make provision about the terms on which heat is to be supplied to a heat network, including about the amount that may be charged.
  4. The section also provides that regulations may allow zone coordinators to set emissions limits on heat networks in zones, subject to the consent of the Authority. A grace period may be applied before this requirement takes effect and regulations may specify when this should apply, including the procedure and notice period to be followed, and route for legal challenge when a grace period is refused. The Authority may also issue guidance in relation to grace periods.
  5. The section also sets out the definition of "emissions" and "targeted greenhouse gas", in the context of the emissions limit provision.

Section 233: Delivery of district heat networks within zones

  1. Section 233 provides that zones regulations may make provision for the delivery of district heat networks by zone coordinators within zones, including for the Authority to give advice to zone coordinators.
  2. In particular, the regulations may make provision for the grant of consent from zone coordinators to be required for the development of district heat networks within zones and provide powers for zone coordinators to grant exclusive rights within a zone. Regulations may make provision for the Authority to publish the standard conditions that zone coordinators must use when granting an exclusive right. The section also provides that zones regulations may provide that, after a certain timeframe, a zone coordinator may lose the power to decide the delivery model for heat networks within a zone.
  3. The section also provides for zones regulations to make provision for a zone coordinator to vary or revoke a decision made regarding the delivery of district heat networks in zones and provides for an appeal process.

Section 234: Enforcement of heat network zone requirements

  1. Section 234 provides that zones regulations may make provision regarding the enforcement of heat network zone requirements, such as the requirement to connect to a district heat network or the requirement to provide information to a zone coordinator.
  2. These regulations may provide for zone coordinators to issue notices requiring demonstrations of compliance within a certain period and impose certain penalties for non-compliance. Provision may also be made for the appeal of notices.

Section 235: Penalties

  1. Section 235 clarifies what may be included in regulations relating to penalties issued under section 231(2)(c), relating to requests for information, and section 234(2)(c), relating to enforcement powers. This includes provisions around the maximum penalty, procedure, grounds for legal challenge, how penalties may be recovered and that sums received may be paid into the Consolidated Fund.
  2. This section also allows the Authority to issue guidance in respect of the penalty-making powers described above, including in relation to how the amount of a penalty may be determined.

Section 236: Records, information and reporting

  1. Section 236 provides that zones regulations may require zone coordinators to collect information which enables the identification of areas as heat network zones or supports monitoring of areas which have been designated as heat network zones. Regulations may also require zone coordinators and the Authority to maintain records of relevant information they receive including that which is by virtue of their powers to request information to fulfil their functions (section 231).
  2. This section also provides that regulations may include provisions that enable or require:
    • zone coordinators to provide information to other zone coordinators, the Authority or the Regulator; and
    • the Authority to provide information to zone coordinators or the Regulator.
  1. In each case, the section also provides that zones regulations may make provision to ensure that the sharing of information does not constitute breaches of data protection legislation or obligations of confidence.

Section 237: Interpretation of Chapter 2

  1. Section 237 sets out how various terms within this Chapter are to be interpreted.

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