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The planned roll-out of private heat networks – which can leave people with sky-high energy bills, trapped with a supplier they didn’t necessarily choose – is being reviewed.
It follows concerns highlighted by the Manchester Evening News. Last month, the M.E.N. reported on problems at The Chips building on Lampwick Lane in Ancoats, where residents live on a private heat network, meaning they cannot change energy supplier.
People living there were up-in-arms over sky-rocketing energy bills, with one saying his monthly tariff had gone up from around £60 per month to £425 for July. Private heat networks use insulated pipes to move heat from energy source to multiple homes or businesses all located in the same area, with ‘communal’ networks only covering one building, and ‘district’ networks covering multiple premises in close proximity.
In The Chips’ case, as a resident uses more energy, their bill will go up, but people said their standing charges pushing prices up – rising by 1025 per cent, from 7p to 80p per day in some cases.
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“My energy bill went from £83 to £280 for a month,” said Lee Halsall, who moved in in 2019. “There’s no explanation to go with it. The place is now a living nightmare.”
‘Heat network zoning’ in the next few years was being considered, in effect, rolling out the concept to more Mancunians.
The Chips’ residents are billed by a company called Switch2. The rates for energy are set by another firm, New Islington Utilities (NIU), itself is a subsidiary of property developers Urban Splash, the firm that constructed The Chips in 2009.
A spokesperson for Urban Splash said at the time, NIU had shouldered ‘significant losses’ due to wholesale energy prices jumping in September 2022, which meant it could not secure a cheap rate of supply. That situation was exacerbated by proposed subsidies from the government being cancelled in January.
“Ultimately, the situation is wholly regrettable and is largely down to chaos in the energy markets towards the end of 2022, the uncertainty, and subsequent withdrawal of government support,” the spokesperson said, who provided a statement on behalf of NIU Switch2.
“We are continuing to engage with Switch2 to support residents at this time and hope to confirm further government support to mitigate future rises – something we hope to confirm in the near future.”
The M.E.N. now understands the roll-out of heat networks has been paused until more regulation is brought in by the government. The Department for Energy Security and Net Zero unveiled plans shortly after the Chips’ issues came to light to allow energy regulator Ofgem to step in ‘where homes and businesses have problems with disproportionate pricing, poor customer service and poor reliability’ from 2025.
“Heat networks allow people to heat their homes more cleanly, while cutting their costs and reducing carbon emissions,” said Lord Callanan, Minister for Energy Efficiency and Green Finance, on unveiling the move. “They are also an important tool in our push for greater energy security and independence.
“As more homes and businesses are connected to these innovative systems, it’s only right we ensure consumers are properly protected, pay a fair price for their energy, and are given the best service possible.”
However, as Ofgem will only be granted powers in two years’ time, it’s understood councillors have concerns over the lack of protection for residents and businesses connected to heat networks.
Additionally, Anthony McCaul, the Labour member for Deansgate who also sits on the authority’s environment scrutiny committee, said: “I have had reassurances from the council that future domestic heat networks will need further assurance from government [to go ahead], through planned legislation”
The M.E.N. has asked the council if it can confirm this, but a spokesperson could only clarify a review of the Tower of Light network was underway, which only supplies commercial premises. The council notably launched the Tower of Light last year, nicknamed the ‘Granada Familia’, which acted as a heat or energy source for Manchester Central, Bridgewater Hall, the Town Hall extension in the library, Manchester Art Gallery and Heron House, connected together as a private heat network.
Earlier this year, a spokesperson for the Tower of Light said they were examining the possibility of ‘heat network zoning’, in the next few years, especially those in the city centre living in flats.
“It’s going to encourage new buildings to connect to a heat network in the vicinity so we are then on a journey to make it an attractive proposition for new-builds to connect to it,” the spokesperson added. “Potentially we’d be pitching to new apartment blocks. What we would do is sell that heat to the building owner as a block then they would distribute it and bill individuals. As an organisation we wouldn’t do that, they would pass on the cost based on each meter in a flat.”
Today (September 26), a statement from the council confirmed that a review of that network is underway, but denied it it was linked to the government’s reforms. The town hall said: “The Manchester Energy Network (Civic Quarter Heat Network) was established with the purpose of supplying energy to commercial customers, providing it at a competitive price and to support the wider council goal of becoming a zero-carbon city by 2038.
“Given the recent energy crisis the council is aware of additional strain which has been placed on businesses, however, as part of the network’s business plan for 2024/25 a review is currently underway looking at new approaches to charging.”
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