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Sector Insights

Property Alert: Landlords and “Heat Suppliers” Caught by the Amended “Heat Network Regulations”

10.06.2015 Commercial property, Residential property

Janet Ayres

Janet Ayres Partner

Landlords of multi-let buildings who supply heat, hot water or cooling through a communal system may be bound by the obligations imposed by the Heat Network (Metering and Billing) Regulations 2014 as  amended by Heat Network (Metering and Billing) Amendment Regulations 2015.

What is a “communal heating system”?

A pre system within a building which has a central source of steam, hot water, or cooled liquids for the distribution of thermal energy, the purpose of which is for the use of space or process heating, cooling or hot water to more than one user.

Briefly, the obligations imposed by these Regulations cover three areas:

  1. An obligation to notify the National Measurement and Regulation Office (NMRO) of all or any qualifying communal heating systems by no later than 31 December 2015. Not all communal heating systems have to be disclosed but if there is such a system and the premises are, for example, flats in a block or converted house, shared offices, units in a shopping centre, then the obligation to notify will bite;
  2. An obligation to issue bills which comply with the standards set out in the Regulations. Whether these standards have to be met will depend upon whether the Regulations require, in this case, a landlord or “heat supplier” to ensure that meters or “heat cost allocators” are installed [see below]. The standards require that bills and billing information for the consumption of heating, cooling and hot water must meet the following requirements if it is technically possible and economically justified to do so:
    • be accurate and contain details of the current energy prices, the bill payers energy consumption, a comparison of the energy consumption for the period covered by the bill and the previous period and details of where the bill payer can obtain further information;
    • be based on actual consumption;
    • comply with the other standards set out in schedule 2 to the Regulations.
  3. There is a detailed and complicated test of “technical or economic justification” referred to above but this short Alert is not the place to set these out in full.
  4. An obligation to install meters, “heat cost allocators” and thermostatic radiator valves. When?
    • from 31 December 2016 a landlord, or “heat supplier”, must ensure meters are installed in all buildings with a communal heating system, where it is both cost effective and technically feasible to do so. Again, the Regulations set out a test for what is cost effective or technically feasible. If installing meters is not cost effective or technically feasible, then the landlord may be obliged to install other types of measurement apparatus.
    • From 18 December 2014, if an existing meter system in a communal heating system is being replaced, then the landlord, or “heat supplier”, must ensure the replacement is a suitable meter, unless this is technically impossible or the estimated cost would be unreasonable. The Regulations do not give any idea of what these phrases may be interpreted as meaning or including.

The NMRO has been appointed the enforcement authority for the regulations. It ca

  • Serve a compliance notice;
  • Impose a penalty for non-compliance;
  • Accept an undertaking to carry out certain works within a certain time limit;
  • Instigate a criminal prosecution for breach of the Regulations.
NMRO have produced the Heat Network (Metering and Billing) Regulations 2014 Scope Guidance which is useful and can be found on their website.

Article authors:

Janet Ayres