🟠 Priority

Level 2 Actions

Tariffs & Fair Pricing

Contracts & Heat Supply Agreements

Reporting & Evidence

🟠 Priority Level 2

TARIFFS & FAIR PRICING

Under Ofgem's regulatory framework, heat suppliers and operators will be expected to demonstrate that tariffs are fair, transparent and cost reflective.

Residents should be able to understand how charges have been calculated, why tariffs have changed and have confidence that costs are being recovered fairly.

What should you be doing now?

Complete an annual tariff review
Document the tariff calculation methodology
Retain invoices and supporting financial evidence
Complete annual reconciliations
Record tariff approvals and implementation dates
Ensure residents receive clear information about tariff changes at least 31 days in advance of changes
Tariff changes limited to once every 6 months, unless a pre-notified variable tariff applies for a defined period

Questions to ask your provider

How is our tariff calculated?
Can you explain every element of the charge?
What evidence supports this year's tariff?
When was the last reconciliation completed?
How are tariff changes communicated to residents?
Can you demonstrate that our pricing follows Ofgem's Fair Pricing Principles?

🟠 Priority Level 1

TARIFFS & FAIR PRICING

What should your tariff review demonstrate?

Cost Reflective

Tariffs should reflect the genuine costs of operating the heat network and avoid unnecessary cross-subsidy between residents.

Regularly Reviewed

Tariffs should be reviewed periodically to ensure they remain accurate, reflect current operating costs and recover costs fairly.

Transparent & Clearly Communicated

The methodology used to calculate tariffs should be clearly documented and capable of being explained to residents if requested.

Supported by Evidence

Every tariff decision should be supported by documented calculations, reconciliations and financial evidence.

🟠 Priority Level 2

CONTRACTS & HEAT SUPPLY AGREEMENTS

You should now review whether your contractual documentation reflects how your heat network is managed and meets the requirements of the regulated market.

This doesn’t necessarily mean formally amending existing leases. Where appropriate, supplementary heat supply terms can be issued to residents to provide the additional information and protections required.

What should you be doing now?

☐ Review existing leases and Heat Supply Agreements

☐ Identify any outdated or ambiguous provisions

☐ Check resident obligations remain clearly defined

☐ Identify where supplementary heat supply terms may be required

☐ Ensure customer-facing documentation is consistent

☐ Seek legal advice where contractual amendments may be required

☐ Keep a record of reviews and any actions taken

🟠 Priority Level 2

CONTRACTS & HEAT SUPPLY AGREEMENTS

What do you need to review?

Leases

Consider whether existing leases clearly define:

✔ Responsibility for supplying heat and hot water

✔ How charges are recovered

✔ Resident rights and obligations

✔ Access arrangements for maintenance and meter readings

Heat Supply Agreements

Review whether they reflect current operational arrangements, including:

✔ Billing and payment arrangements

✔ Complaints handling

✔ Vulnerability and Priority Services support

✔ Service standards

✔ Planned interruptions and emergency procedures

Supporting Documentation

Ensure supporting documents remain aligned with your contractual arrangements, including:

✔ Resident Welcome Packs

✔ Tariff information

✔ Customer policies

✔ Terms and conditions

✔ Complaints procedures

🟠 Priority Level 2

REPORTING & EVIDENCE

Ofgem's regulatory framework will require heat suppliers to evidence how their networks are being managed. This means organisations will need access to accurate operational data, consistent reporting and documented audit trails.

The challenge isn't collecting more information, it's ensuring the right information is available, validated and can be produced when required. And although reporting is anticipated to start from October 2026, organisations may need to demonstrate evidence covering earlier periods. Waiting until reporting becomes mandatory could leave significant gaps in your compliance evidence.

The next page shows you what you need to report on and evidence for Metering & Consumption, Billing & Customer Accounts, Tariffs & Pricing, Debt Management, Vulnerability & Priority Services and Complaints & Customer Care.

🟠 Priority Level 2

REPORTING & EVIDENCE

What information should you be able to report?

Metering & Consumption

You should be able to demonstrate:

☐ Meter asset information

☐ Consumption data

☐ Estimated vs actual billing

Billing & Customer Accounts

You should be able to report on:

☐ Customer account status

☐ Account balances

☐ Final bill delivery times

☐ Payment history

Tariffs & Pricing

Evidence should include:

☐ Current and historic tariffs

☐ Tariff reviews

☐ Tariff change history

☐ Standing and administration charges

☐ Pricing methodology

Debt Management

Reporting should include:

☐ Outstanding debt

☐ Number of Disconnections

☐ Payment plans

☐ Affordability arrangements

☐ Debt recovery activity

☐ Resident support provided

Vulnerability & Priority Services

You should be able to demonstrate:

☐ Priority Services Register activity

☐ Vulnerability records

☐ Support arrangements

☐ Communication preferences

☐ Reasonable adjustments

Complaints & Customer Service

Reporting should include:

☐ Complaint volumes

☐ Complaint categories

☐ Response and resolution times

☐ Escalation outcomes

☐ Energy Ombudsman referrals

☐ Customer service performance