Consumer protection rules for heat networks: what you need to know

Effective from 27 January 2026, Ofgem will serve as the statutory heat networks regulator that oversees the heat networks market. As of this date a package of consumer protection rules will come into place, including an extensive set of general authorisation conditions with which heat network operators and suppliers must comply. The rules are intended to give consumers of heat networks comparable protection to those afforded to consumers of gas and electricity. 

The introduction of consumer protection sits alongside a raft of other policies being introduced to support the growth of the heat network industry as a critical part of the government’s heat decarbonisation pathway. The UK government’s Warm Homes Plan set out the government’s target to more than double the amount of heat demand to be met in England via heat networks to 7% by 2035, and for heat networks to provide a fifth of all heat demand by 2050. The Warm Homes Plan confirmed the government’s extension of the Green Heat Network Fund and Heat Network Efficiency Scheme to 2029-30, as well as mobilisation of the National Wealth Fund to support the roll out of the heat network.

The government also published its response to its 2023 heat network zoning consultation, in which it sets out its detailed plan for heat network zoning implementation and confirms its intention to introduce the detailed policy through secondary legislation in spring 2026.

How did we get here?

Prior to 27 January 2026, unlike gas and electricity customers, heat networks were not protected by Ofgem. This meant that some heat network consumers were subjected to high prices, inaccurate bills and poor customer service.

The Competition and Markets Authority recommended in 2018 that the heat sector should be regulated. The Energy Act 2023 is the primary legislation which established the statutory framework for heat regulation, including designating Ofgem as the heat networks regulator.

The Heat Networks (Market Framework) (Great Britain) Regulations 2025 built upon this framework, including setting out how authorisation to act as a supplier or operator works, establishing a criminal offence for not being authorised with Ofgem and defining when Ofgem can take enforcement action.

Prior to publishing its final general authorisation conditions, Ofgem undertook a series of consultations in 2024 and 2025 to obtain stakeholder feedback on its proposed consumer protections for consumers.

Alongside the general authorisation conditions, Ofgem has also published and consulted on various guidance documents. These include specific guidance on registration, data reporting, fair pricing, consumer protection and financial resilience and are intended to be read in conjunction with the conditions.

The new consumer protection regime

Some parts of the new consumer protection regime for heat networks were already in place prior to 27 January 2026, but this date marks the official ‘launch date’ when most of the provisions under the Heat Networks (Market Framework) (Great Britain) Regulations 2025 came into effect.

From this point, heat network suppliers and operators must comply with detailed general authorisation conditions. The full set of general authorisation conditions is available on Ofgem’s electronic public register. Compliance with these conditions is subject to monitoring and potential enforcement by Ofgem.

Following commencement of the new rules, an initial grace period will apply to suppliers and operators where they are automatically ‘deemed’ authorised to carry out operation and supply activities. After this period it is expected that most will need to obtain formal authorisation from Ofgem to continue to carry out these activities.

Over the next 12 months, operators and suppliers will also be required separately to go through Ofgem’s registration process to provide details of their current activities.

The general authorisation conditions apply in addition to, rather than replacing, existing legislation that suppliers and operators already need to comply with, such as the Heat Network (Metering and Billing) Regulations 2014 (which are also being amended to align with the authorisation conditions) and non-heat network specific legislation, such as consumer protection law and landlord and tenant laws.

A deemed contracts regime also came into effect on 27 January 2026, meaning deemed contract terms will apply to persons with properties connected to a heat network who do not otherwise have a contract in place with the heat network supplier. Suppliers are required under the new authorisation conditions to have available principal contract terms for deemed supply and to endeavour to inform customers on deemed contracts of these terms.

The government has also extended the energy supply company special administration regime to suppliers and operators of heat networks to act as a backstop to ensure preservation of heat supply in cases of financial distress affecting authorised entities where commercial solutions have been exhausted.

Additional consumer protections are expected to be phased in over the course of 2026, including the Heat Network Technical Assurance Scheme (HNTAS) which will introduce mandatory technical standards for heat networks.

Who the regulations apply to

The requirement to be authorised and the corresponding general authorisation conditions, including the registration requirements, apply to any person carrying out a “regulated activity”, a term defined under the Heat Networks (Market Framework) (Great Britain) Regulations 2025 to effectively mean a person operating or supplying from a “relevant heat network”. A “relevant heat network” includes both district heat networks and communal networks, and also covers networks that supply cooling.

In practice, this means that any person operating or supplying from a district heat network or communal heat network will likely be required to comply.

This could affect a wide range of entities, including local authorities, landlords, specialised heat network providers, operators or suppliers of campus networks, metering and billing agents, and operators/suppliers of networks providing heat to industry.

The rules apply differently depending on the nature of:

• the network, including different treatment for industrial and self-supply networks;
• the person carrying out the operation or supply, including different treatment for entities such as local authorities and providers of social housing; and
• the persons being supplied, including different treatment for residential, micro and small business consumers.

There is no general minimum time limit or network size to when these rules apply, so entities carrying out these activities on a small scale or for a short period of time will still be required to comply, including where the activities are being carried out for an interim period before a specialist heat network provider is appointed to take over the activities.

By and large, the measures introduced on 27 January 2026 apply across Great Britain. The Scottish Government is also expected to implement a separate licensing regime for heat networks in Scotland, under which operators or suppliers will need to hold a specific licence in order to perform these activities in Scotland. This regime will operate separately to the Ofgem authorisation regime.

Authorisation and registration

The 2025 regulations make it a criminal offence to carry out a “regulated activity” - being operation or supply of a relevant heat network – without being authorised.

Breach of this regulation can also lead to criminal liability for directors or senior management in a personal capacity where the corporate offence is committed with their consent, connivance or due to their neglect.

Ofgem is expected to provide further details on how to obtain authorisation, but there is an initial grace period where, unless authorisation is revoked by Ofgem:

• anyone carrying out a “regulated activity” before 27 January 2027 is deemed authorised until 26 January 2028;
• anyone carrying out a “regulated activity” before 1 April 2025 will be deemed authorised on an ongoing basis for that activity.

Separately, under the general authorisation conditions, authorised entities will have until 26 January 2027 to register their activities with Ofgem. In January 2026 Ofgem published guidance on registration, fair pricing and cost allocation, consumer protection and the authorisation requirements for heat networks.

The authorisation conditions - what do they cover?

The authorisation conditions cover a broad range of topics, including fair pricing, fit and proper person requirements, cooperation and information sharing with Ofgem including quarterly reporting, adequacy of resources, continuity planning, broad standards of conduct regarding acting fairly, transparently and proactively in supporting customers, and special protections for persons in vulnerable situations.

The conditions are split into three parts: part A – general conditions which apply to all authorised persons; part B – supplier conditions which apply only to heat suppliers; and part C – operator conditions which apply only to operators.

Special conditions may also be introduced in future for particular classes of supplier or operator or to deal with bespoke circumstances of a particular authorised person.

Notable conditions for operators and suppliers to consider

Clearly, it is imperative that any entity required to comply the new consumer protection regime reviews the full requirements of the conditions and accompanying guidance so they are clear on their compliance obligations.

Some of the most notable compliance requirements for authorised persons are:

• authorised persons must maintain robust operational arrangements to safeguard the continuity of each regulated activity the they are conducting, including by 27 January 2027 maintaining a register of all assets used to carry out its regulated activities, known as ‘material assets’;
• authorised persons must have legally enforceable rights over all their material assets to ensure continuity of heat network operations, with such rights being capable of transfer to any person taking over the regulated activity;
• authorised persons are restricted from disposing of or creating security interests over any material assets where doing so would create an undue risk to the continuity of heat network operations, ensuring that essential assets remain available to maintain service continuity;
• authorised persons must ensure that anyone with significant managerial responsibility or influence is a fit and proper person, and must maintain governance processes to assess and monitor this;
• by 27 January 2027, authorised persons must have a continuity plan setting out how customers would continue to receive supply if the entity fails, exits, or transfers operations;

  There are also a series of new important obligations on heat suppliers aimed at improving customer service:

• suppliers must give consumers clear advance notice of at least 31 days of any disadvantageous contract changes or price increases, which cannot take place more than once every six months, ensuring the information is timely, prominent, and sufficient to help consumers understand the change, its reasons, its impacts, and their right to exit the contract;
• suppliers must include specific terms in their supply contracts, which includes leases where this is the legal document governing supply. This includes terms relating to KPIs such as network efficiency, detail on the source of thermal energy and environmental impacts of the network, details on how historic consumption data can be requested, and specific termination rights for consumers;
• suppliers must maintain and follow a clear, accessible, and fair complaints‑handling procedure that records, investigates, and resolves complaints promptly, supports vulnerable consumers, cooperates with other authorised parties where relevant, and signposts and offers consumers the right of redress to an independent redress mechanism, such as the Energy Ombudsman or Housing Ombudsman;
• suppliers must provide accurate, timely, and clearly explained bills and billing information based on actual consumption where possible, while ensuring transparency on charges, consumption, tariff options, support services, and consumer rights, and doing so in accessible formats;
• suppliers must ensure that charges to heat network consumers are reasonable, transparent, and directly aligned to underlying costs, so that prices are neither unfair nor disproportionate, as outlined in Ofgem’s fair pricing and cost allocation guidance (PDF 44 pages / 313 KB);
• suppliers cannot back‑bill certain consumers for heat used more than 12 months ago except in limited circumstances such as consumer obstruction, ensuring that customers are only charged for consumption within the previous year and protecting them from being charged with unexpected historic debts;
• suppliers must support consumers in payment difficulty by offering fair repayment options, avoiding unreasonable security deposits or disconnections – especially for vulnerable households – proactively identifying affordability issues, and ensuring that all debt‑recovery actions and direct debit amounts are reasonable, transparent, and based on the consumer’s ability to pay.

Much of the consumer protection requirements build upon the existing requirements of the Heat Trust scheme, which a number of suppliers voluntarily signed up to in the absence of formal regulation. From 27 January 2026, special Heat Trust scheme provisions will apply for a transition period to help ease the transfer of standards and regulatory oversight to Ofgem.

Ofgem’s enforcement powers

Ofgem has been given significant enforcement powers to address non‑compliance with the new heat network authorisation conditions. These powers allow Ofgem to investigate breaches, issue final or provisional enforcement orders, impose financial penalties up to 10% of an authorised person’s turnover or £1 million – whichever is higher – and require consumer redress orders, with the overall approach modelled on its established gas and electricity enforcement framework.

Ofgem is also consulting on dedicated Heat Network Enforcement Guidelines and a penalty policy, which set out how it expects to use these powers, including the potential use of fixed penalties.

What businesses should do

Organisations should begin by identifying all heat networks they operate or supply – including those still in development – and clarify the type of network it is classified as in the new rules, the types of consumers being supplied and their role on each network, whether as supplier, operator, or both.

They should review existing consumer contracts, information materials and operational practices to ensure they align with the new authorisation conditions, and more generally reflect on provisions within contractual arrangements such as change in law clauses to identify whether the new requirements will trigger any provisions.

Robust governance, reporting and data‑management processes will need to be established to meet Ofgem’s upcoming monitoring and compliance requirements, and suppliers should ensure they are registered with the Energy Ombudsman to meet redress obligations.

Further changes are expected as Ofgem finalises guidance and additional conditions. Businesses should actively monitor new publications and consultations to stay ahead of emerging duties.