Residents of flats with communal heating systems could mount a legal claim against their network operators after experiencing rises of up to 700% in their bills.
Lawyers are investigating the possibility of a legal claim on behalf of residents whose home heating and hot water is supplied through a heat network, the Guardian can reveal.
While households with conventional heating systems are covered by the energy regulator for Great Britain Ofgem’s price cap on bills – and the government’s energy price guarantee – the 480,000 people living in developments where at least some of the heating or hot water is provided by a centrally controlled system do not have equivalent protection.
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Bills have soared as wholesale gas prices have risen sharply over the past 18 months, exacerbated by Russia’s invasion of Ukraine. The lack of protection for heat network customers has meant suppliers have been able to pass on this rise in costs.
The issue particularly affects lower-income social housing tenants and private renters, who are most likely to be under severe pressure from the cost of living crisis.
Under the government’s energy bill relief scheme (EBRS), operators of heat networks should receive support for their energy costs to pass through to residents.
However, residents are still reporting high bills. The law firm Leigh Day said it is investigating whether residents in the 14,000 blocks in the UK that rely on communal heating and hot water systems could mount a legal claim.
The law firm said residents may be able to sue for breach of contract if pricing mechanisms are not being applied correctly or residents are having to pay for excessive heat lost in the system before it reaches their home. They may also be able to sue under competition law given that consumers of heat networks are typically not allowed to change their provider.
Heat Trust, the national consumer protect scheme for heat networks, has said it has seen examples of 300-400% price rises and even some as high as 700%.
Late last year, Munira Wilson, the MP for Twickenham, raised the issue in parliament, saying that residents in Wharf House, a development in Teddington in south-west London, had experienced energy price rises of 560%. She said: “These people can be living in private housing, as is the case in my constituency, but particularly across London many affected by this issue live in social housing and in buildings that range from Victorian mansion flats through to very recent developments.”
Residents have told the Guardian that they felt “powerless” and the situation was “incredibly unfair”. Some had even begun looking for alternative accommodation while others were not using their heating.
The Leigh Day solicitor Leonardo Gonzalez, who is leading the investigation into the problem, said: “It is concerning to read reports of enormous price increases hitting heat network consumers, often already overstretched by the cost of living crisis. I believe there are legal avenues that could be explored to offer some means of redress to these consumers who feel unprotected and powerless in this unregulated sector.”
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He said: “What was once a niche sector is becoming much larger and sadly there is scope for abuse from these unscrupulous, hidden networks, which are effectively local monopolies.”
Gonzalez is in the process of research that could result in a legal claim if large numbers of affected households come forward.
The London mayor, Sadiq Khan, last year called for equivalent support to other households for the 400,000 residents on heat networks in the capital, which has a far greater number of such networks than the rest of the country. “All I am asking for is for all Londoners to be treated fairly,” he said.
The District Energy Association said that commercial gas costs had risen more sharply than domestic costs and that support through the EBRS scheme was “slowly filtering through” and residents’ costs should reduce. It said there are no legally binding technical standards for heat losses.
Ofgem last year began work to more tightly regulate heat networks to encourage low-carbon investment and protect vulnerable customers.