Loophole sees 50K homes in South London not protected by Government’s energy price cap

About 50,000 homes in South London are not protected by the Government’s energy price cap.

Residents with communal heating systems, or network heating, are currently excluded from any protection created by the price cap, leaving them exposed to price rises in the wholesale gas market.

Some residents living in heat network blocks claimed gas bills would be nine times their regular amount this winter.

One resident, Oliver Birrel, who is chairman of the residents association for the Wing development in Camberwell Green, said that their bills would be four times higher than those for residents covered by the price cap.

“These prices are bloody ridiculous,” said Mr Birrel. “Most people in the building are saying they won’t turn the heating on this winter, or will use electric heaters which are pricey but not as pricey as gas.

“Most of us are braced to pay hundreds of pounds more this winter.”

The heat networks, typically found in new builds, are not currently regulated by Ofgem and the price they charge for heat is not subject to any price cap.  

The network operators – usually the building owner or freeholder, or their appointed energy company, buy the gas for the communal boilers on the commercial gas market, not the domestic market that most homes use.

The Government has said that people living in homes with network heating will receive “equivalent support” to those with the price cap through the Energy Bill Relief Scheme recently set-up for businesses.

But Stephen Knight, director of consumer organisation for people using network heating, Heat Trust, said this scheme would still leave residents in heat network buildings paying at least twice as much as those with the price cap because the buildings use more energy overall as there is significant heat loss.

The scheme will also only run until March 2023, whereas the price cap has been guaranteed for two years, and will take effect from “the end of the year”, with no clarity on what will happen from October when prices are set to rise.

Mr Knight estimated there are at least 50,000 people in South London with this problem.

He said: “The Prime Minister promised that heat network customers would be ‘no worse off’ and receive ‘equivalent support’ to the two-year Energy Price Guarantee for domestic energy customers.

“However this is not ‘equivalent support’ and will leave heat network customers paying about twice as much for heating and hot water as domestic gas customers with their own boilers.”

A Department for Business, Energy & Industrial Strategy spokeswoman said: “The Government has been clear that households not on standard gas or electricity contracts, such as those on heat networks, will receive support equivalent to both the Energy Price Guarantee, which limits what households can be charged, and the Energy Bills Support Scheme, which provides a £400 rebate to billpayers. The Government is working at pace to determine the most practical way of delivering this support.”

Pictured top: Wing development in Camberwell (Picture: Google Street View)