Heat networks regulation: recovering Ofgem’s costs

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