Scotland 10,000 homes connected

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3 Scotland 10,000 homes connected 3

4 Despite ESCO specific examples of Customer Charters and agreements drafted to protect customers there is the increasing recognition that particularly in new build residential schemes there is a lack of regulation. The Future of Heating Meeting the Challenge March 2013 EED requirements for bill transparency ADR Directive means we have to fulfil certain requirements, like ensuring ADR is available for all contractual disputes between a consumer and a business HNDU :- Supporting 118 projects across 88 local authorities in England and Wales. Almost 7 million of grant funding has been awarded. COP which seeks to enhance the quality of new heat networks schemes across the supply chain and to reduce costs by helping to standardise procurement. The IHCPS are therefore industry s proposals to address market concerns, support ambition and provide a route to compliance with European Legislation. 4

5 RISK Heat unregulated so no support from Ofgem or Energy Ombudsman Provide an independent dispute resolution service Provide a framework to mitigate certain risks associated with installing DH Government, industry and consumer groups have come together to identify risks and issues and created a document which seeks to address them Establishes common standards and principles COST Minimises the perceived risks of installing DH therefore reducing cost with investors more wiling to participate Improves decision making, planning and prioritisation Avoids highly prescriptive government regulation which could add significant costs and stifle the growth of this developing market sector REPUTATION Provides a framework to ensure customers are treated fairly reducing the instance of complaint and general dissatisfaction. Enhanced transparency in billing and performance standards Enhanced information transfer with customer Consumers can be confident they are dealing with suppliers where the fair treatment of customers is central to their culture 5

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7 Offer protection to as many heat customers as possible; metered and unmetered Replicate, where appropriate, the protection afforded to energy customers through regulation Only set detailed requirements for Registered Sites in areas critical to customer protection Focus on the quality of customer experience, not the how this is achieved, so as not to stifle innovation Independence, not CHPA scheme, steering committee customers and suppliers Consumer representation in design and governance 7

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9 The Scheme is open to all qualifying sites in the United Kingdom. The Scheme applies to metered, unmetered, domestic and commercial properties where the heat customer pays for their heat supply directly. The Scheme covers the Primary Heat Network of a Registered Site only. The Primary Heat Heat Network includes the energy centre, the heat network up to and including the heat interface unit (HIU), heat meter and any other equipment relating to heat metering and billing (Primary Heat Network), but not the in-dwelling heating and hot water systems (secondary systems). For some heat networks the heat supplier may also be responsible for the secondary systems. Whilst the expected service provision for these systems will be set out in the Customer Heat Supply Arrangement, the Scheme does not mandate any criteria for the secondary systems. Please note cooling networks are not included within the scope of the Scheme. 9

10 Largely identical to requirements for regulated utilities: Customer obligations Support for vulnerable customers Supplier obligations Performance standards and guaranteed service level payments Customer service and reporting a fault or emergency Joining and leaving procedures Paying the heat bill and payment difficulties Disconnection and re-connection process Complaint handling and independent adjudication Privacy policy and data protection DH Specific: Heat meters and heat interface units Heat bill and heat charge ---- In drafting the suite of documents that make up the Customer Heat Supply Arrangement Registered Sites must ensure all heat customer obligations, on which they seek to rely, are set out in a clear and understandable way this reduce ambiguity for customers In addition Registered Sites must ensure sufficient heat energy is supplied to reach or exceed the minimum level required by the secondary systems (heating and hot water systems) within the heat customer s property at the design external air temperature. Registered Sites are required to have systems in place to ensure that heat energy supply is maintained at the performance standards set out to their heat customers. This includes evidence of contingency and maintenance plans, but also any arrangements to cover more extreme circumstances. The flow temperature specific to each heat network is required to be stated within the Customer Heat Supply Arrangement, along with an indication, where appropriate, of how this may be varied to ensure efficient operation. The return temperature specific to each heat network must also be stated in the Customer Heat Supply Arrangement. 10

11 The assessment criteria are complemented by proposals for independent adjudication; a dispute resolution service for Heat Customers on participating heat networks, once Heat Supplier s own complaint procedure is exhausted at no cost to the Heat Customer. set up with the intention of providing a means of complaint resolution that is cheaper, faster and more effective than court action. The Independent Complaint Handling Service will be provided by Ombudsman Services All costs of using this service are borne by the Registered Site to ombudsman decision The Independent Complaint Handling Mechanism will be provided by the Ombudsman Service who provide expertise in dealing with customer complaints and operate the Energy Ombudsman. The Ombudsman Service also have employees that are expertly trained to deal with complaints concerning district heating. 11

12 The Government is in the process of adopting the European Directive on Alternative Dispute Resolution (ADR). It is seeking to ensure that consumers have access to out of court redress in every EU member state,regardless of the nature of goods or services involved, or the place of purchase. This will be in place by July 2015 consumers have particularly low levels of trust and confidence in businesses who do not take their problems seriously Energy sector particularly 12

13 Many complaints about DH = pricing Important part of IHCPS will be heat cost comparator which will be independent of the Scheme but available alongside via an online resource tool. True comparison of the cost of heat. Customers regularly don t compare the cost of heat and instead compare the price they pay for DH with the unit price of gas. The supply of gas alone does not get customers heat. To calculate the true costs of heating with a guaranteed heat supply, all year round -we need to take into account their boiler efficiency, maintenance of that boiler and the replacements costs when it comes to the end of its useful life, typically every ten years or so. most people do not make a distinction between heat and gas. Two possible heat charge comparators: Gas boiler and electric storage heater Currently only Gas The outcome will be an annual alternative heating charge which will be easily compared to current heating charges. This will be shown clearly to be more or less expensive than the district heating solution over an annual period, and will also compare unit rate costs (p/kwh). Publically available datasets Energylinx(Ofgemapproved data provider, U-Switch)provideunit costs of fuel plus associated standing charges.gas price p/kwh average of basket of tariffs for appropriate region Heat demand would be taken from customer data. If customers do not know their consumption we could potentially use NExAtables (attached) which takes an average of gas demands for different housing stocks and regions Domestic Boiler Efficiency = 81% SAP data, Energy Saving Trust research, under the EED 30kw combiboiler = On average need to replace every 11 years. CIBSE guidelines 11.2 years Maintenance = cost of gas boiler maintenance cover, with zero excess, istypically per year. Maintenance Costs would be average of a basket of maintenance cover options Which?has carried out research which suggested that boiler maintenance cover packages with zero excess do not provide the best value to customers, however under DH that is what a customer has if there are faults with the heat supply/ Will be accompanied by a numberof caveats 1. Rental 2. Communal space heat gains and losses 13

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16 An important transplantfrom the regulated utilities will be Guaranteed Service Level Payments where a Participating Network has not met its performance standards. Where a planned interruption to heat supply lasts longer than 5 working days, from the start time indicated in the Registered Site s written notice to heat customers, Registered Sites are liable to pay guaranteed service payments to the heat customer at 30 for each full 24 hour period (from hour 24) Where the heat supply, meeting the minimum temperature set out in the Customer Heat Supply Arrangement, is not restored within 24 hours of the first registered notification from a heat customer, Registered Sites are liable to pay guaranteed service payment to the heat customer, at 30 for each full 24 hour period (from hour 24) Where a heat customer notifies a Registered Site of four or more unplanned interruptions during any 12-month period and each unplanned interruption lasts for over 12 hours, Registered Sites are liable to pay a one-off guaranteed service payment of 54 to the heat customer Where a Registered Site fails to make provision to maintain vulnerable heat customers heat and hot water service where an interruption to supply, planned or unplanned, lasts longer than 12 hours Registered Sites are liable to pay a one-off guaranteed service payment of 24 to the heat customer. 16

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