Heat networks regulation: enforcement guidelines and penalty policy
3 publications
Heat networks regulation: recovering Ofgem’s costs
Ofgem consults on how to recover its costs of regulating heat networks. Proposes fee structures for heat network operators to fund regulatory oversight.
Sets the cost burden on heat network operators for the new regulatory regime. Costs likely passed to heat network consumers.
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Heat networks regulation: recovering Ofgem’s costs | Ofgem
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Heat networks regulation: recovering Ofgem’s costs
Publication type:
Consultation
Publication date:
17 February 2026
Closing date:
02 April 2026
Status:
Open
Topic:
Heat networks
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We are consulting on our proposed options for heat networks regulatory cost recovery.
Consultation description
Ofgem’s regulatory costs will be recovered through the licence fees paid by certain gas and electricity licensees during the initial period, and at a later date, through fees that will apply to both gas and electricity licensees and heat network authorised persons. The government decided on this overarching blended approach to recovering Ofgem’s costs of Heat Networks regulation in 2022, following a consultation in 2021.
To give effect to the government’s decision, this consultation sets out policy proposals on the detailed arrangements to underpin cost recovery of heat networks regulatory costs. In particular, we set out proposals on the following:
on the detail of the blended approach for recovering the heat network regulatory cost from across heat network authorised persons and gas and electricity licensees,
to impose a de minimis threshold
the fee apportionment method
fee incidence
the frequency of payment collection
The policy proposals have been designed to streamline administrative process and reduce administrative burden, whist balancing fair outcome and proportionate approach.
Who should respond
The consultation will be of interest to the heat network industry, including:
heat network operators
heat network suppliers
energy services companies
housing providers
consumer groups
asset owners
metering and billing agents
trade associations
The proposals on recovering costs will also be of relevance to the gas and electricity sector, including network companies and supply licensees.
How to respond
Complete our online consultation on Citizen Space by Thursday 2 April 2026. If you have any questions, email HeatNetworksRegulation@ofgem.gov.uk
You can also submit your response by Thursday 2 April 2026 by emailing HeatNetworksRegulation@ofgem.gov.uk
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Heat networks regulation: fair pricing protection guidance
Ofgem consults on fair pricing protection guidance for heat network consumers. Proposes rules to prevent exploitative pricing by monopoly heat suppliers.
Consumer protection measure for captive heat network customers who cannot switch supplier. Parallels the electricity price cap concept for a different market.
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Heat networks regulation: fair pricing protection guidance | Ofgem
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Heat networks regulation: fair pricing protection guidance
Publication type:
Consultation
Publication date:
29 September 2025
Last updated:
13 January 2026
Closed date:
28 October 2025
Status:
Closed (with decision)
Topic:
Heat networks
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Heat networks regulation: authorisation conditions and guidance on measures to mitigate the risk and impact of financial failure | consultation
Heat networks regulation: authorisation conditions | consultation
Heat networks regulation: consumer protection guidance | consultation
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We are consulting on a fair pricing and cost allocation guidance framework for heat networks.
Details of outcome
We consulted on a fair pricing and cost allocation guidance framework for heat networks. We received 38 responses from a range of stakeholders including:
energy network operators
energy suppliers
trade associations
consumer advocacy bodies
housing associations
local authorities
property management companies
individual consumers
metering and billing providers
We reviewed responses and considered stakeholder views. In general, stakeholders were supportive of our proposed guidance on fair pricing and cost allocation.
Whilst there was general support, we did receive feedback on potential changes that could be included prior to the publication of the first iteration of guidance to aid in clarity and understanding. Some stakeholders expressed concerns with areas of the guidance related to the ‘affordability’ and ‘fair and reasonable returns’ principles.
We have decided to proceed with the overall approach to the first iteration of guidance, focusing on the fair pricing principles and cost allocation. We have made changes to wording structure where appropriate, in response to stakeholder feedback.
In particular, we have updated the ‘industry outcome’ to make clear that sector growth is a desired outcome of this framework, and that a fair return for investors is a key element of achieving this, alongside ensuring consumers have confidence in the sector through fair pricing.
We have also decided to rename the ‘affordability’ principle to ‘consumer impact’ to minimise confusion, however the underlying principle and the areas it covers remain unchanged.
Read the heat networks regulation: fair pricing and cost allocation guidance
Read the full outcome
Read the full outcome of this consultation in our online consultation .
Original consultation
Consultation description
This consultation builds on:
the Heat networks regulation: implementing consumer protections consultation, published by the Department for Energy Security and Net Zero (DESNZ) and Ofgem in November 2024 and the government response published in August 2025
our Heat networks regulation: fair pricing protections consultation, published in April 2025 and our response, published in September 2025.
We are now seeking views on our draft guidance for the rules and requirements set out in our heat network authorisation conditions relating to fair pricing and cost allocation.
Who should respond
We would like views from people with an interest in heat networks and particularly welcome responses from:
heat network operators
heat network suppliers
energy services companies
housing providers
consumer groups
asset owners
metering and billing agents
trade associations
We would also welcome responses from other stakeholders and the public.
How to respond
This consultation closed on Monday 27 October 2025.
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Related links
Heat networks regulation: authorisation conditions and guidance on measures to mitigate the risk and impact of financial failure | consultation
Heat networks regulation: authorisation conditions | consultation
Heat networks regulation: consumer protection guidance | consultation
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All updates
13 January 2026 added details of outcome and link to fair pricing and cost allocation guidance.
5 December 2025 replaced 'How to respond' text after consultation had closed.
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Heat networks regulation: enforcement guidelines and penalty policy
Ofgem consults on enforcement guidelines and penalty policy for heat network regulation. Sets out how non-compliance will be investigated and sanctioned.
Establishes the teeth of the new heat networks regulatory regime. Penalties create incentives for operator compliance.
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Heat networks regulation: enforcement guidelines and penalty policy | Ofgem
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Heat networks regulation: enforcement guidelines and penalty policy
Publication type:
Consultation
Publication date:
18 August 2025
Last updated:
20 February 2026
Closed date:
7 October 2025
Status:
Closed (with decision)
Topic:
Heat networks
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Related links
Heat networks regulation consumer protection - Government response
Heat networks regulation: authorisation and regulatory oversight
Heat networks regulation: implementing consumer protections
Heat networks regulation: authorisation conditions and guidance on measures to mitigate the risk and impact of financial failure
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We are consulting on our proposed enforcement guidelines and penalty policy for heat networks regulation in Great Britain (England, Scotland and Wales).
Details of outcome
We asked for views on:
Heat Networks enforcement guidelines
Heat Networks penalty policy
the potential use of fixed penalties
The consultation asked stakeholders for views on whether our proposed Heat Network enforcement guidelines and penalty policy clearly set out our approach to enforcement and accurately reflect the policy intent we have previously communicated. It also invited feedback on the potential use of Fixed Penalties and specific drafting considerations.
We received 33 responses from a range of stakeholders.
The responses received broadly agreed with the proposed approach, with constructive feedback highlighting areas for clarification to be addressed in guidance.
The final enforcement guidelines and penalty policy have now been published, and they will apply alongside the wider heat networks regulatory framework as it operates.
Read the full outcome
Read the full outcome in our online consultation .
Heat networks regulation: enforcement guidelines
Heat Networks regulation: penalty policy
Original consultation
Who should respond
We would like views from people with an interest in heat networks, and particularly welcome responses from:
heat network operators and suppliers
landlords
housing providers
asset owners
consumer groups
energy services companies
managing agents
metering and billing agents
trade associations
heat network consumers
Background
Ofgem has new enforcement powers to regulate heat networks in Great Britain under:
the Energy Act 2023
the Heat Networks (Market Framework) (Great Britain) Regulations 2025
In our authorisation and regulatory oversight decision we indicated our overall approach to enforcement and that we would consult on our enforcement guidelines and penalty policy. We are now consulting on our proposed approach to using these powers, including how we will investigate breaches and apply financial penalties or consumer redress orders.
Our proposals are informed by our experience regulating gas and electricity and are designed to promote good practice and deter poor conduct.
Why your views matter
Your feedback will help us shape a fair and effective enforcement framework for heat networks. It will ensure our approach reflects the needs of consumers, operators, and other stakeholders in this evolving sector.
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Related links
Heat networks regulation consumer protection - Government response
Heat networks regulation: authorisation and regulatory oversight
Heat networks regulation: implementing consumer protections
Heat networks regulation: authorisation conditions and guidance on measures to mitigate the risk and impact of financial failure
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All updates
20 February 2026: published outcome of consultation.
5 December 2025: replaced 'how to respond' text after consultation had closed.
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Summary
Ofgem: Heat networks regulation: recovering Ofgem’s costs; Heat networks regulation: fair pricing protection guidance; Heat networks regulation: enforcement guidelines and penalty policy