Solicitor Gemma Smith, in our Commercial Property team, explains the obligations under the Heat Network Regulations.
Owners and landlords or management companies of multi-let residential and commercial buildings who supply heat, hot water or cooling through a communal source may need to consider their obligations under the Heat Network (Metering and Billing) Regulations 2014 (“the Regulations”) where the occupiers pay a share of the total building’s heating, cooling and hot water costs, most commonly by way of a service charge.
The Regulations will affect those who supply and charge a final customer for heating, cooling and/or hot water. This may be supplied through a communal heating system (one or more final customers within the same building) or a district heat network (one or more final customers in multiple buildings).
The key obligations for heat suppliers
Notification
Heat suppliers are required to send certain information to the National Measurement and Regulation Office (NMRO) in relation to each supply. The required information is set out in the Regulations.
The deadline for the notification of current systems was 31 December 2015 and going forwards notification must be completed on or before the date of the systems first operation. There is also an ongoing obligation to update this information every four years.
Installation
Heat suppliers have a duty to install meters for each final customer (measuring the consumption of heating, hot water and cooling) by 31 December 2016. This only applies where it would be “cost effective and technically feasible” to do so. The heat supplier must report to the NMRO details of any installations made or provide evidence that it would not be “cost effective and technically feasible”. If the cost effective and technically feasible exemption applies, other types of equipment such as heat cost allocators will need to be installed. However, this is also subject to the cost effective and technically feasible test, which must be repeated every four years where it applies.
Billing
Where individual meters are installed, final consumers must be provided with billing information that is accurate and based on actual consumption. As service charges are generally based on square footage rather than consumption, these Regulations will impact negotiation of new service charge provisions but it remains to be seen whether the Regulations will override current agreements.
Penalties for non-compliance
The NMRO have several enforcement measures available should heat suppliers not comply with the Regulations. The sanctions are: service of a compliance notice, civil sanctions including penalties of up to £5000 per offence and criminal prosecution.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
