Yesterday, Sustain attended a consultation workshop for the Heat Networks (Metering and Billing) Regulations held by the regulator, the National Measurement and Regulation Office (NMRO), and the Department of Energy and Climate Change (DECC). The aim of the workshop was to assist the regulators in shaping the technical and financial viability assessment required under EU law.
The participants – representing local authorities, social and private landlords, metering providers, commercial organisations and energy consultants – engaged in healthy debate about the form this new viability assessment should take. There were also some very useful updates from both the regulators and DECC.
First of all, the timetable for a revised viability assessment being made public has been pushed back to the end of this year, with actual viability assessments likely to start in January 2017. This is because DECC need to issue a public consultation in the summer on the proposed new approach to the viability assessment, followed by the legislation itself being amended. This process must all now follow the UK’s EU referendum and resulting purdah.
Clearly the current deadline for installing customer level meters by the end of December 2016 needs to be revised, which is acknowledged by the regulator and DECC.
But note, it remains clear that some meter installations remain mandatory regardless of any future changes to the viability assessment, and indeed should have been done from December 2014. These are where:
- new district heating networks are commissioned,
- there is major refurbishment to buildings already using district heating,
- a new building is attached to an existing district heating network,
- where a building with multiple heat customers is already connected to a district network but has no customer level metering in place and therefore a building level meter is required.
Clarification around metering
Importantly, guidance was given that where a building with multiple heat customers is already connected to a district network and there are customer level meters in already place, the heat supplier should hold back installing a block level meter for now. This may in the long run turn out to be unnecessary from a legislative point of view, albeit a missed opportunity in terms of heat management.
Another useful clarification was that where meters must be implemented and as a result tenancy agreements must be changed to accommodate usage-based billing it appears that the tenant will not legally be able to resist such a change.
Crucial issues still plague viability tool
It was clear in the workshop that the underlying assumptions that underpin the viability assessment are being reviewed. The legislation requires that the balance of fuel savings versus installation/operating cost must be assessed. But how are those savings and costs to be calculated? What savings should be assumed (currently 20%)? What costs should be included? Plus the notion in the current viability tool that boilers are 85% efficient and that the distribution network only loses 10% of its heat was widely disregarded. And in what circumstances is it never or always viable to install heat meters?
There will be an opportunity to provide evidence to support or challenge the current assumptions and answer these questions through the summer consultation.
Sustain will continue to work with the regulator and DECC and provide updates to the regulations. What are your own thoughts or questions about the regulations?
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