Scots tenants face 'farcical' 500% heating bills increase for green energy homes

Scots tenants in green energy homes who get heating and hot water from a communal boiler are faced with 'massive' hikes in energy costs.

Thousands of new build homes across the country are served by district heating schemes (DHS), which connect a large number of homes and are usually provided by a large central boiler house, underground distribution pipes, and plant rooms on an estate. Tenants are provided with hot water all year and heating in the colder months.

But tenants served by DHS are excluded from the energy price cap because of a 'loophole' which sees residential customers charged at commercial rates, meaning they can be hit with eye-watering rises in metered charges without protection. , due to 'loophole' which sees residential customers charged at commercial rates, excluding them from the protection of the energy price cap.

Shocked residents at one Edinburgh development were left facing an increase of more than 500% on unit charges, at the start of April, which would plunge them into fuel poverty during the cost of living crisis.

Scores of tenants at Greendykes, built by Places for People, reported bills had skyrocketed this month with some experiencing overnight price increases. The rise meant they'd be facing bills in excess of £1200 a year for heat and hot water alone.

It's now been paused after their local MP stepped in, but tenants fear it's only temporary and charges will go up again.

Claire Renwick, who has lived at the Greendykes development for the last four years, said: “As of the 1st of April my provider had implemented a 500% increase in the price I pay per kWh from 5p to 26p - with no notice to myself or my neighbours. This left me facing bills in excess of £200 a month for heating and hot water.

"I pay into a meter and usually it's about £40 a month. That was used up in 5 days this month. I have about £50 electricity on top. Now I might need to find an extra nearly £200 a month. It's really daunting. It's just not right.

“This will put a huge financial strain on me, along with the many other cost of living increases. I'll need to look at how I can scrape this together from money I use for food or other essentials.

"It's scary. We are trapped to one provider with no option to shop around or swap tariffs, leaving myself and my neighbours forced to find 5 times the money to simply have warm showers and heat our homes.”

Places for People which supplies the heat told tenants the hikes have been stopped for now, after local MP Tommy Sheppard stepped in. But tenants are worried they could face even bigger hikes within weeks as district heating is not regulated.

Mum-of-two Maria Vrabec, 38, said: "We heard from a neighbour who told us to check our meter. We were shocked. Before it would tick along but you could see the credit just disappearing. We've not put the heating on since and feel we can hardly bath the kids.

"The biggest worry is that it could go up again, at any time. I don't know what we will do to find the money. I have a two year old but might need to go out to work in the evenings to make ends meet. We feel these homes have been falsely advertised as fuel efficient and cheaper for energy costs. We need more protection."

Tommy Sheppard MP has written to the UK Government to demand action over district heating systems being charged at commercial, rather than domestic rates, following the UK Government’s Energy Bills Discount Scheme ending in March. This has meant residents who are part of district heating schemes fall into a loophole of the UK Government’s energy price cap, meaning price rises for them are not subject to the same controls.

He said: “Residents are worried and rightly angry about the impact of these eye-watering rises. It’s farcical that having done everything right, these residents now face bills well in excess of what they would be paying if they had an individual gas boiler. This defeats the entire point of low carbon energy schemes which are essential if we’re to continue to make progress on tackling climate change.

“The UK Government need to urgently bring district heating schemes under the same price protections as the rest of the energy market. It’s not right that energy companies continue to make a killing out of residents purely because of a technicality that the UK Government have been aware of for years and have done nothing to resolve.

"I’m pleased Places for People have responded to quickly to our raising of this issue on behalf of their tenants and they deserve credit for absorbing these costs in the short term but the problem is the UK Government’s inaction and these increases could reappear within weeks if UK Ministers ignore the problem.

“I’m demanding action from UK Ministers. They’ve been asleep at the wheel while residents in my constituency are suffering, they need to fix this now. What’s happening isn’t fair.”

Places for People Scotland Ltd is the heat supplier with Residential Management Group Ltd (RMG) appointed to manage the heat network on their behalf. The contract is under review. A spokesperson for Places for People said: “We are sorry for the worry that this situation has caused some of our customers, and we understand their concerns.

“We had been able to protect these customers from the impact of the national energy crisis in recent years with our previous contract, which allowed us to freeze prices for four years, but that contract came to an end. Since then, we have had to enter into a new one-year fixed contract which resulted in a higher rate.

"However, in light of the ongoing conversations with our customers, and the concerns raised, we are reviewing this contract and whilst this review is underway, prices for heating and hot water will revert to the previous rate until the review is completed and a new price is established and communicated.

“We have now contacted all affected customers to confirm the temporary price freeze and our next steps, if any of our customers have any queries or need our support they can contact our District Heating Team via District.Heating@rmguk.com.”

A Department for Energy Security and Net Zero spokesperson said:

"These bill rises are unacceptable and do not reflect the drop in energy prices that should be passed onto customers.

"Heat suppliers should ensure they are on the most competitive energy contracts and review their pricing to ensure that customers receive the best possible deal.

“We are introducing tougher protections from next year, to ensure all heat network customers get a good service and fair prices.”

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