Consumer Scotland has published its response to an Ofgem consultation on fair pricing protections for heat network consumers, supporting the regulator's principles-based framework while pressing for further measures. The response was first published on 14 July 20251.
The statutory body, established by the Consumer Scotland Act 2020 and funded by the Scottish Government, is the statutory advocate for heat network consumers in Scotland and delivers a statutory advice service with Advice Direct Scotland and the Extra Help Unit at Citizens Advice Scotland1. It said it supports the framework as a starting point, with further consultation due later in 2025 on fair pricing guidance1.
Consumer Scotland set out three areas where it wants Ofgem to go further: setting out its approach to monitoring input fuel costs to start driving down prices across the sector; introducing prescriptive rules on how metered heat networks allocate costs on bills, including unit rates and standing charges; and being ready to act from January 2026 if it suspects or is alerted to bad practice on pricing1.
"Ofgem is ready to take action from January 2026 if it suspects, or is alerted to, bad practice related to pricing"
On the fairness test, the response examines a three-stage approach: identifying disproportionate pricing, assessing concerns, and prioritising actions. It notes the proposed benchmarking methods, which use gas boilers and heat pumps as external reference benchmarks alongside a network's own past prices and comparator networks, and encourages Ofgem to phase out the gas boiler comparator over time1. It also supports collecting and reviewing EBIT margins for all heat networks, and states that redress such as guaranteed standards of performance payments, compensation, fines and penalties should not be passed through to customers1.
The response raises a Scotland-specific point on consumption: energy demand is generally higher in Scotland than elsewhere in Great Britain, so resources such as the Typical Domestic Consumption Value will often be lower than average Scottish consumption1. It also notes that the National Zoning Model applies to England and Wales only1.
| Area | Consumer Scotland position |
|---|---|
| Input fuel cost monitoring | Ofgem should set out its approach to drive down prices |
| Cost allocation on bills | Prescriptive rules on unit rates and standing charges |
| Enforcement | Ready to act from January 2026 |
| Gas boiler comparator | Phase out over time |
| EBIT margins | Collect and review for all heat networks |
| Redress payments | Not passed through to customers |
Why it matters for households
Heat network consumers do not choose their supplier in the way gas and electricity customers can, so the pricing rules set by Ofgem are the main protection available to them. The framework under consultation is intended to ensure consumers pay fair and not disproportionate prices, with the authorisation condition interpreted in line with guidance published by the Authority1. For a household on a heat network, the practical questions are what the unit rate and standing charge cover, whether tariff increases can be applied retrospectively, and how charges are set on unmetered networks, all of which Consumer Scotland identifies as recurring concerns in studies of the consumer experience1.
The response also notes that as many as eight out of 10 consumers report they would not tell their supplier if they were struggling1. Consumer Scotland's role as statutory advocate sits alongside the wider landscape of energy consumer bodies in Great Britain, and its work on heat networks forms part of the developing heat network regulation regime.
What happens next
Further consultation on fair pricing guidance is due later in 20251. The authorisation window runs from January 2026 to January 2027, and Ofgem is ready to take action from January 2026 if it suspects or is alerted to bad practice related to pricing1. Consumer Scotland said it will contribute to this work as part of its statutory advocacy role in 2025-26, and continues to advocate for a funding mechanism for heat network efficiency remediations in Scotland1.