Anthony Coates-Smith, Managing Director of Insite Energy, weighs up the pros and cons of handling heat network billing and metering in-house.

The UK heat network market is booming. Advances in technology combined with support from government, which sees communal heating as crucial to its strategy to reach net zero emissions by 2050, are causing a surge in investment. This is expected to continue for some years. Research suggests heat networks could account for 43% of UK heat demand by 2050, compared to just 2% in 2018.

All this means facilities management companies are increasingly encountering contracts for developments that include heat networks, and with that, the question, from either the developer or the FM company, of how to handle metering and billing. Some FMs are starting to view this as an opportunity to introduce a new, high-value revenue stream into their business, while enhancing their appeal to clients.

“Research suggests heat

networks could account for 43% of UK heat demand by 2050, compared to just 2% in 2018.”

It is indeed a high-value service, because, as well as potentially offering big benefits to landlords and residents, it’s far from simple to provide.

One significant challenge is the regulatory environment, which is highly complex and continuously changing. Meanwhile, enforcement is stringent - with the potential for civil and even criminal proceedings for non-compliance.

Trade associations have been active in recent years, increasing awareness of the Heat Network Metering & Billing regulations initially introduced in 2014. Yet, despite these efforts, many FM companies underestimate the complexity and level of investment involved in meeting statutory requirements, such as detailed reporting to government and the provision of individual customer meters giving precise and transparent heat usage data.

FMs are procurement experts, adept at striking the right balance between value and price. However, the level of specialist knowledge needed to provide heat network


metering and billing at the required standard is above that of other types of managed service. To protect consumers locked into heat network contracts, the regulatory bars are set dauntingly high, out of reach of most non- specialist players.

Aside from legal requirements, residents themselves are nowadays used to hopping easily from supplier to supplier (something they can’t do with a heat network) and have come to expect service excellence, competitively priced. If reality falls below expectations, it’s FM providers that have to field those calls and fix the problems - and that quickly eats into margins.

At Insite, we consider ourselves primarily a customer services operation and our performance benchmark is the top end of the ‘big six’ utility brands. We have spent over ten years and £3m honing our customer service model to oversee the metering and billing for around 28,000 residential units. We have a dedicated call centre, an online customer self-service platform and sophisticated back- end systems, we offer monthly reports, client account managers and expert advice that our FM partners trust. If they need to contact us, they know we’ll respond in under a minute, even late evenings or weekends.

To achieve this level of service while being a viable, profitable and sustainable metering and billing provider requires that serious customer volume. We’ve seen small FM players and mechanical and electrical companies attempt it. It doesn’t work.

Another hassle FMs don’t need is chasing and under- recovering resident debt. As experts in resident communications and heat tariff setting, heat debt is virtually eliminated for our clients.

Access to finance is a key advantage for FM companies who partner with a metering and billing specialist. Rather than investing heavily themselves, our sector can offer finance and help property managers realise the cost-saving benefits of switching to the latest smart metering and billing technologies quickly.

In June, a government consultation concluded into new legislation to give improved protection for consumers connected to heat networks. We’re expecting another raft of criteria affecting metering and billing processes, further building the case for less risky, more cost-effective outsourcing to specialists.

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