Charges on a heat network are divided into two parts: your Standing Charge and your Usage Charge. This mirrors the wider utility markets. You can find information about the specific rates that apply to your home in your Welcome Pack, and you can find out who your Heat Supplier is from your bills.
What are the types of Charges?
Unit Charges
The unit charge is quoted as pounds per kilowatt hour (£/kWh). Your heat meter measures the amount of kilowatt-hours of heat you have used. The way you use your heating and hot water will influence the amount of kWh you are charged for as your usage.
The unit charge typically encompasses all the fuel costs that your heat supplier incurs to generate heating and hot water for your district heating network.
Standing charges
The daily standing charge is quoted as pounds per day (£/day). This charge is a compulsory daily charge that is applicable across your development to recover the costs of running and maintaining your district heating network.
The daily standing charge often includes the costs that your Heat Supplier incurs to get the heat to your home. Therefore, the charge encompasses fixed costs associated with providing heating and hot water to the entire site. These costs could include the standing charges that the heat supplier must pay their utility provider (e.g., a gas company) for the gas supply, plus the maintenance costs for managing the network.
Do I pay VAT for my heating and hot water?
Any VAT paid is shown on your bill
What if I want to change the supplier?
Every Heat Network is bespoke to the area it serves. Due to the communal nature of Heat Networks, they must be managed as a whole, which means all properties connected to the network have no alternative supplier. Due to the nature of the infrastructure, it is not possible to select or change to an alternative supplier. However, this arrangement ensures all residents benefit from a dependable, sustainable, and efficient energy supply.
While this may feel like a lack of choice, there are structures in place to protect consumers, including the Heat Trust and the Energy Ombudsman.
How do these charges compare to gas tariffs?
In contrast to individual gas tariffs, where you are billed specifically for the amount of gas you consume in your home, heat tariffs in a communal heat network operate differently. These tariffs encompass the entire process involved in providing heating to your property. This includes the cost of purchasing the raw gas, converting it into heat through a centralised heating system, and distributing that heat to individual homes within the network.
The communal heat tariff covers several additional components beyond the raw fuel cost. For instance, it accounts for the maintenance and operation of the centralised heating system, the efficiency of heat production, and the infrastructure required for distribution, such as insulated pipes and heat exchangers. It may also include expenses related to energy losses that occur during transmission and any administrative or management fees associated with running the network.
As a result, while individual gas tariffs are relatively straightforward and directly tied to your personal consumption, heat tariffs are structured to ensure the smooth operation of the entire communal system. This means that even if your heat usage is low, your tariff may still reflect shared costs necessary to keep the system running efficiently and reliably for all users. It is therefore not possible to directly compare a gas or electricity tariff to a heat tariff.