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Local energy networks need code of practice

Consumers must be protected properly if decentralised energy networks undergo major expansion in London, according to a new report by a group of businesses and public bodies.

The report, Cutting the Capital’s Carbon Footprint, was prepared by Buro Happold for London First and released last month.

It said decentralised energy projects could attract billions of pounds in private investment if the London Development Agency (LDA) establishes a new body, Energy for London, to lead on the issue.

But, the report, prepared with input from a whole range of groups including Arup, EDF Energy and the Greater London Authority (GLA), also said the industry urgently needed a code of practice and minimum technical standards to be established.

Michael King, associate at the Combined Heat and Power Association, described the report as a “milestone” for setting down a framework for the future which would attract private investors.

But, he added: “There is undoubtedly a need for confidence in respect of consumer protection.

“Hopefully in the future the networks can be organised in the same way as gas and electricity networks, but at the moment these networks are monopolies and people have to have confidence that they are not going to be ripped off in respect of prices and quality of service.

“The Department for Energy and Climate Change is looking at this, but is still to take a decision on what level of regulation is needed.”

The report said: “Community heating does not have a good reputation in the UK. Persuading consumers to connect will not be easy, as there may be limited incentives to connect and alternative choices available.”

It said energy companies must “develop and commit to a code of practice for heat supply to safeguard consumers.”

Other proposals included a standard service level agreement covering speed of response, reliability and complaint handling.

Chris Twinn, director of Arup’s sustainable buildings team, said: “We are involved in a number of projects involving decentralised systems and one of the frustrations is that we end up with secrecy around the contracts being used. Every project has to ‘reinvent’ the contracts for customers and in relation to the supplier and developer.

“We need a national standard – probably overseen by Ofgem – to set the minimum standard customers should expect so people can have confidence in the service they are going to get.”

The LDA declined to discuss the details of the report, but said it was in the middle of a restructuring programme and was developing a strategic implementation plan with the GLA.

Syed Ahmed, the GLA’s principal policy officer for climate change and energy, discussed regulation in relation to decentralised heat networks at the Sustainable London – the Olympics and Beyond conference organised by the Central London Energy Management Group in mid-October.

He said: “Our approach in the GLA and in our discussions with Ofgem and Government is to talk about a light touch approach to regulations. You must provide protection to consumers and something we bear in mind at the moment with our policies is not to allow people to be locked into a heat supplier who can manipulate what their heat need is.”