17 November 2022
At least 17,000 homes in Southwark are served by communal heat networks. Communal heat networks buy gas wholesale and then distribute it to residents and because communal heat networks are not regulated by Ofgem residents are not protected by the energy price cap. This means that, at a time when global gas prices are soaring, these costs get passed directly onto the consumer.
The majority of residents in the UK on heat networks live in social housing, and the majority of those in social housing are over the age of 55, which means that these price rises often disproportionately hit the elderly and those on low incomes. Southwark Council has negotiated competitive gas prices for its bulk purchasing for many years and it is also absorbing some of the financial shock caused by energy price spikes, so council tenants in Southwark are protected from the worst of the price rises. But the Government should have acted far sooner and it is unacceptable that many heat network customers have been left without protection.
I back the call from Labour for far greater regulation of the heat network system so that customers are properly protected and do not see unsustainable price rises. I want there to be a new regulatory regime for heat networks, including bringing heat networks onto the price cap system if possible.
People in Camberwell and Peckham on communal heat networks have already faced huge increases in their bills. The wholesale price of gas has increased over 200% in the past year and is forecast to continue to rise.
I have been contacted directly by no fewer than 40 constituents who are on communal heat networks and who are concerned about unsustainable rises in their energy bills. One constituent told me that their bill was due to increase by 776% and another said that their bill had already increased from £87.53 last year to £630.25 this year.
One constituent said that the bill rises will:
make heating and hot water unaffordable for many residents and families and we remain exposed to even worse potential rises the year after.
This 400% rise is going to make heating and hot water unaffordable for many of our residents, who are on low or fixed incomes. It is distressing news, especially as we face job losses, wage stagnation and other rises in the costs of living.
In September I wrote to the Secretary of State for Business, Energy and Industrial Strategy on behalf of my constituents demanding that people on heat networks be included in the Government’s plan to freeze energy prices.
Following my letter, I was reassured to see that people on communal heat networks were included in the Government’s policy. However, clearly the promised Government support has not materialised for many of my constituents, meaning that they are still facing huge rises in their bills. This failure to provide timely support despite it having been announced is yet another failing by the Government and I have asked further questions of the Secretary of State for Business, Energy and Industrial Strategy, Grant Shapps, to press for the promised support to get to my constituents and hundreds of thousands of others. I continue to press the Government and once I have the Government’s response I will be communicating it directly with my constituents.