Explainer
Most heat networks do not bill their own residents. A billing agent does it for them. From January 2026 that arrangement sits inside a regulated market for the first time, and the operator, not the agent, carries the obligations. Here is what changes and what to check.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
A heat network billing agent is a company appointed by a landlord, housing association, developer or network operator to run the customer side of a communal or district heating scheme. Typically that means reading or remotely collecting heat meter data, applying the tariff and standing charges the operator sets, producing bills or topping up prepayment credit, collecting payments, chasing arrears, handling customer queries and complaints, and reporting back on consumption and revenue. On some schemes the agent also recommends the tariff and manages the metering estate. For many residents the agent is the only face of the heat network they ever see.
The Energy Act 2023 made Ofgem the regulator for heat networks in Great Britain, and the first consumer protection rules came into force on 27 January 2026, with the Energy Ombudsman taking complaints and Citizens Advice providing advocacy. Authorisation conditions for heat network operators and suppliers follow in stages over the next few years. The regulated party is the heat supplier, which in practice is the operator or landlord who contracts with residents. A billing agent is not itself authorised, but almost everything Ofgem will judge a supplier on, from bill accuracy to complaint handling to how vulnerable customers are treated, is work the agent performs. The agent’s processes have become the supplier’s compliance evidence.
The Heat Network (Metering and Billing) Regulations 2014, enforced by the Office for Product Safety and Standards, already require meters where they are cost effective, bills based on actual consumption and clear information on how charges are made up. The Ofgem regime adds the consumer protections residents of gas and electricity have had for years: fair and transparent pricing with powers to intervene where prices are unjustifiably high, standards for bill content and frequency, rules on back billing, prepayment and disconnection safeguards, support for customers in vulnerable circumstances, a defined complaints process with escalation to the Ombudsman, and reporting to the regulator. Each of those is a billing process, and each needs data the agent holds.
Which obligations are allocated to the agent and which stay with you, in writing, against the new rules rather than the old ones. Whether you have access to your own meter data, customer records and complaint logs, in a usable format, without asking. Audit rights, so you can test bill accuracy and complaint handling yourself rather than take a report. Service standards that mirror the Ofgem requirements, with remedies that bite. The agent’s system capability for prepayment safeguards, back billing limits and vulnerability flags, because a spreadsheet will not pass. And exit terms: how you would move residents to another agent or in house without a gap in billing, which is the one scenario every operator should have a plan for.
Start with a gap check of your current billing against the consumer protection rules, using a sample of real bills and real complaints rather than the process documents. Review the agent contract against the six points above and renegotiate what does not hold. Audit the metering and customer data, because unmetered or misassigned flats are the most common source of wrong bills. Decide how residents will be told about their new rights and who answers the phone when they use them. Then build the evidence file as you go, so that when Ofgem asks how you know bills are right, the answer is on paper. We have spent nineteen years in utility billing, and the mistakes heat networks are about to make are the ones energy suppliers made a decade ago. They are avoidable.
Related reading: heat network regulation compliance consultancy, billing integrity and revenue assurance, the billing exception cost calculator.
Not directly. Ofgem regulates the heat supplier, usually the operator or landlord. The agent delivers much of what the supplier is judged on, so its performance and your contract with it are central to compliance, but the authorisation and the liability sit with the supplier.
No. A heat network is a local monopoly, which is why the market has been brought under regulation. Residents can now complain to the Energy Ombudsman and seek advice from Citizens Advice, and Ofgem has powers to act on unfair pricing.
The 2014 regulations, amended in 2020, require heat suppliers to notify the Office for Product Safety and Standards, fit meters where it is cost effective and bill residents on actual consumption with clear information. They sit alongside the new Ofgem regime rather than being replaced by it.
Consumer protection rules took effect on 27 January 2026. Authorisation conditions for operators and suppliers are being introduced in stages after that, so operators should treat 2026 as the year to get billing, complaints and data in order.
If you operate a heat network or act for one and want a plain view of where your billing stands against the new rules, a short confidential conversation is the place to start.