The General Scheme of the Heat (Networks and Miscellaneous Provisions) Bill provides for the regulation of tariffs charged by district heating operators. Under the Bill, the Commission for Regulation of Utilities (CRU) shall develop a principles-based, step-in approach to pricing. This will require that all charges are in keeping with the following principles:
• non-discriminatory;
• transparent;
• cost-reflective;
• cost-efficient;
• allow for fair and reasonable returns; and
• take account of consumer impact and affordability.
The CRU shall publish guidelines on the interpretation and application of these principles by heat undertakings. The CRU may also advise the Minister on the necessity of additional pricing regulation for the application of its framework.
The Bill will also empower the CRU to require heat undertakings to provide information relating to charges, tariffs, costs and revenues, in such manner and frequency as it may specify. Heat undertakings will be obliged to comply with CRU decisions, and to notify the CRU of any proposal to amend charges or any failure to supply heat. For the purposes of monitoring and assessing compliance, the CRU will be enabled to carry out comparative or benchmarking assessments of charges, costs or performance, having regard to differences in scale, technology, location and customer characteristics.
Where the Commission determines it to be necessary, it shall:
• examine charges for heat and the costs underlying such charges;
• examine any proposal by heat undertakings to alter charges for the supply of heat;
• issue directions or approvals in relation the nature and amount of any charge, or proposed charge, for the supply of heat, to such class or classes of final customers as the Commission may specify; and
• take any actions on foot its monitoring powers that it determines to be necessary to prevent market distortion or anti-competition practices in the supply of heat to final customers.
Officials from my Department are engaging with the Office of the Parliamentary Counsel to advance drafting of this Bill, which will introduce a regulatory framework enabling the expanded use of efficient low-carbon district heating while introducing consumer protection measures, including price regulation.