The Heat Networks (Market Framework) (Great Britain) Regulations 2025

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations make provision for regulating district heat networks (networks to which two or more buildings are connected) and communal heat networks (networks that operate in a single building, typically one divided into flats).

Part 1 of the Regulations contains definitions that are used throughout the Regulations, notably definitions of “authorised person” and “regulated activity”. It is a regulated activity to operate a district heat network or communal heat network or to supply heating, cooling or hot water by means of such a network (including to businesses or, in the case of district heat networks, communal heat networks). Except in narrow classes of case, the Regulations require persons who carry on regulated activities to be authorised and persons who have, or are treated as having, a heat network authorisation are referred to in the Regulations as authorised persons.

Under Part 8 of the Energy Act 2023, the heat networks regulator in England, Wales and Scotland (“the Regulator”) is the Gas and Electricity Markets Authority (“the GEMA”). Accordingly, when the Regulations refer to “the Regulator” this will normally be the GEMA. However, Part 2 of the Regulations also gives some Regulator functions (in respect of heat meter accuracy) to the Secretary of State. These are expected to be exercised by the Office for Product Safety and Standards. Part 2 also sets out the principal objective and over-arching duties of the Regulator.

Part 3 of the Regulations sets out the obligation to be authorised to carry out regulated activities (subject to exceptions) and contains provision about applying for an authorisation, authorisation conditions and modification and revocation of authorisations. It also contains transitional provisions under which existing heat network operators, etc. will be treated as having been authorised but will still need to supply specified information to the Regulator.

Part 4 of the Regulations sets out details of enforcement action that the Regulator will be able to take against authorised persons, including provisional and final orders, financial penalties and consumer redress orders. It also makes provision for certain functions of the Competition and Markets Authority to be exercised concurrently with the Regulator.

Part 5 of the Regulations sets out powers to require information that are available to the Regulator in connection with enforcement and in connection with the expiry and revocation of authorisations. It also (with Schedule 2) sets out a power for the Regulator to conduct inspections.

Chapter 1 of Part 6 of the Regulations enables the Regulator to make regulations about standards of performance to be met by authorised persons. These regulations are to be made by statutory instrument and must provide for compensation to be payable for failure to meet the standards. Chapter 2 of Part 6 provides for rules in the Consumers, Estate Agents and Redress Act 2007 about consumer advocacy, complaints procedures and redress schemes to apply, with specified modifications, for the benefit of heat network consumers. The Energy Ombudsman Scheme is established as the initial redress scheme in relation to heat networks.

Part 7 of the Regulations makes provision for money to be collected from authorisation fees to support consumer advocacy and advice and makes clear that if there were any surplus, after authorisation fees had been used for the purposes of the regulatory framework, it would need to be paid into the Consolidated Fund.

Part 8 of the Regulations creates offences of carrying on a regulated activity without authorisation, failure to provide information in response to a notice from the Regulator, provision of false or misleading information to the Regulator, intentionally altering, suppressing, etc. documents required to be provided to the Regulator, obstructing inspections under Part 5 and impersonation of persons exercising powers to enter premises.

Part 9 of the Regulations makes the GEMA the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021 and amends that Act to make additional provision for monitoring compliance with, and enforcement of, conditions of heat networks licences issued under section 5(5) of the Act.

A full impact assessment of the effect that this instrument will have on the costs of business, the voluntary sector and the public sector is available at www.legislation.gov.uk. Hard copies of the impact assessment can be obtained from the Heat Networks Policy team, Department for Energy Security and Net Zero, 55 Whitehall, London SW1A 2HP.