More than half a million households on shared heating systems are set to see their bills rise beyond the price cap in April.
Energy regulator Ofgem is being urged to close this loophole which excludes some domestic households from bill increases.
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Ofgem’s energy price cap limits how much households can be charged for their gas and electricity when out of contract.
It is set by Ofgem each April and October.
The energy regulator said last week that the cap will rise from £1,277 to £1,971 from April as record wholesale gas prices have pushed up the cost of gas and electricity.
This limits the amount that providers can charge for each unit of energy for 22million domestic customers who are on default standard tariff deals.
But around half a million people living in flats that share communal heating network systems won’t benefit and don’t get any cap on their bills.
This is because heating networks are currently unregulated and users are treated as commercial customers.
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They also can’t shop around for deals as the supply is arranged by the landlord or development manager.
As well as missing out on the price cap, these customers won’t benefit from the £200 energy rebate discount on their gas and electricity bills in October as they don’t count as domestic customers.
What is a heat network?
There are around 17,000 communal heat or district networks supplying almost 500,000 UK customers.
These customers get their energy from a central heat network that uses insulated pipes to deliver it to domestic or non-domestic buildings.
It is up to the development owner to source a supplier from the commercial rather than domestic energy market and then charge residents.
The residents don’t have any choice of supplier and can’t switch themselves.
How much more do heat network customers pay?
Broker Ginger Energy last month warned that while block owners have a duty to find the best value rates for their residents, rising energy costs and the lack of a price cap is making it harder to find decent deals.
The Heat Trust, which represents consumers on these deals, says residents and landlords operating heat networks are already reporting examples of price rises of up to 700%.
The organisation said that is the equivalent of a price of milk rising to £3.85.
Stephen Knight, director of the Heat Trust, has written to Business Secretary Kwasi Kwarteng, asking him to give customers on shared heating systems access to government support and protection from price rises.
Knight said shared heating networks can offer low-carbon and more energy-efficient heat but gas price increases are making it unaffordable.
He said: “Many people will have to choose between heat and food.
“Heat networks are becoming increasingly common with social landlords, meaning the most vulnerable people in society are the ones most affected by the current crisis. We can’t let that happen.”
The government announced at the end of last year that Ofgem would be given the power to regulate heat networks and is currently consulting on how this would be funded.
Ofgem said in a statement: “Ofgem’s remit does not currently include regulating heat networks, however the government has set out proposals to regulate the sector, including appointing Ofgem the regulator for heat networks.
“This will ensure heat network customers, especially those in vulnerable circumstances, receive a fair price and reliable supply of heat for their homes as we make the transition to net zero.”
What help can heating network customers get?
Heating network customers can’t access as much energy bill support as domestic energy users unfortunately.
There is no price cap and these residents won’t currently get the £200 energy rebate in October unless regulation of the sector and the rules change before then.
Households on pension credit or low incomes may usually qualify for the warm home discount scheme.
But the £140 payments come directly through domestic energy suppliers who are part of the warm home discount scheme and your name has to be on the bill so a heating network customer may not be able to apply.
Pensioners on heating networks may still qualify for one-off winter fuel payments, worth £100 to £300 to cover the colder months, as these are paid by the government.
It is also worth checking with your local council for household support grants that can help those struggling with bills such as paying food and clothes.
This may then free up some cash to cover your energy bills.
We have rounded up 44 ways to cut your energy bills
One government measure that may help is £150 of council tax support that is being added to bills in April.
We explain how the council tax rebates work.
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