Heat networks regulation: fair pricing protection guidance

We are consulting on a fair pricing and cost allocation guidance framework for heat networks. This builds on our joint consultation with the Department for Energy Security and Net Zero (DESNZ) on [implementing heat networks regulations for consumer protection](https://assets.publishing.service.gov.uk/media/6735deaef6920bfb5abc7b2c/heat-networks-regulation-implementing-consumer-protections-consultation.pdf) (2024 implementing consumer protections consultation) and our [fair pricing protections consultation](https://www.ofgem.gov.uk/sites/default/files/2025-04/Heat%20networks%20regulation%20fair%20pricing%20protections%20consultation.pdf) (April 2025 consultation). The responses to these consultations have been analysed, with the consumer protection [government response](https://assets.publishing.service.gov.uk/media/689212c8a34b939141463f6d/heat-networks-regulation-government-response.pdf) published on 8 August 2025 and the ​​[response to the consultation on fair pricing protections](https://www.ofgem.gov.uk/consultation/heat-networks-regulation-fair-pricing-protections)​ published on 29 September 2025. Who should respond We would like views from people with an interest in heat networks and particularly welcome responses from: * heat network operators * heat network suppliers * energy services companies * housing providers * consumer groups * asset owners * metering and billing agents * trade associations We would also welcome responses from other stakeholders and the public. Background [The Energy Act 2023](https://www.legislation.gov.uk/ukpga/2023/52/contents) named Ofgem as the regulator for heat networks in Great Britain (England, Scotland, and Wales). Our [Forward Work Plan](https://www.ofgem.gov.uk/sites/default/files/2025-03/Forward-Work-Programme-2025-to-2026.pdf) outlines the work we are doing in 2025 and 2026, including our ongoing preparations for our new regulatory responsibilities for heat networks and the commencement of the new regime in January 2026. We aim to develop a proportionate regulatory framework, balancing: * consumer protections * supporting investment in the sector * government net zero targets The related draft guidance has been developed in conjunction with previous stakeholder feedback and agreed outcomes that we expect to see for heat network consumers. We identified several common themes in the responses to the [April 2025 Heat networks regulation: fair pricing protections consultation](https://www.ofgem.gov.uk/sites/default/files/2025-04/Heat%20networks%20regulation%20fair%20pricing%20protections%20consultation.pdf). We have taken these into consideration when developing the draft guidance. Before you start Read the ​​‘Heat networks regulation: fair pricing protection guidance​’ consultation and draft guidance document. You will find them in the ‘Related’ section on this page. Please refer to the guidance document when giving us your views. Why your views matter Your feedback will help us develop new regulations to protect consumers and improve heat network reliability, while allowing growth in the sector. --- Decision Heat networks regulation: price protections draft guidance decision Publication date: 13 January 2026 Team: Email: Heat Networks heatnetworksregulation@ofgem.gov.uk In the Heat networks regulation: fair pricing protection guidance consultation (‘2025 fair pricing guidance consultation’), we consulted on draft fair pricing and cost allocation guidance. The consultation built on our joint consultation with the Department for Energy Security and Net Zero (DESNZ) Heat networks regulation Implementing consumer protections consultation (‘2024 ICP Consultation’). This document outlines our decisions on these proposals following consideration of the responses to our consultation. Decision Heat networks regulation: price protections draft guidance decision © Crown copyright 2026 The text of this document may be reproduced (excluding logos) under and in accordance with the terms of the Open Government Licence. Without prejudice to the generality of the terms of the Open Government Licence, the material that is reproduced must be acknowledged as Crown copyright and the document title of this document must be specified in that acknowledgement. This publication is available at www.ofgem.gov.uk. Any enquiries regarding the use and re-use of this information resource should be sent to psi@nationalarchives.gsi.gov.uk. 2 Decision Heat networks regulation: price protections draft guidance decision Contents Executive summary ............................................................................................. 4 Introduction ........................................................................................................ 6 Context ................................................................................................................... 6 References to previous publications ......................................................................... 7 Our decision-making process ................................................................................... 7 Our Decision ........................................................................................................... 8 1. Fair Pricing Framework .................................................................................... 9 Question Analysis .................................................................................................... 9 2. Cost allocation ............................................................................................. 37 Question analysis .................................................................................................. 37 3 Decision Heat networks regulation: price protections draft guidance decision Executive summary The Energy Act 2023 named Ofgem as the regulator for heat networks in England, Scotland, and Wales (Great Britain). Our Forward Work Plan outlines the work we are doing in 2025 and 2026, including our ongoing preparations for our new regulatory responsibilities for heat networks and the commencement of the new regime in January 2026. Ofgem is introducing heat network regulation for the first time, marking a key step towards a fair and transparent market. Our priority is to understand the sector and lay strong foundations for long-term standards. We are taking a principles-based outcomes-focused approach that balances flexibility for operators with improvements for consumers. Our aim is proportionate pragmatic regulation that supports compliance and good practice without unnecessary burden. As the market matures and evidence grows, we will refine and strengthen the framework. The goal is to deliver good outcomes for heat networks consumers – fair treatment, transparent information, reliable service and fair prices. The Authorisation Conditions underpinning this regime are designed to be proportionate, cost-effective and drive improvements in consumer outcomes while supporting investments. This document provides a response to the feedback received as part of our Heat networks regulation: fair pricing protection guidance consultation (‘2025 fair pricing guidance consultation’) and accompanies the publication of our final fair pricing and cost allocation guidance (see ‘2025 fair pricing guidance’ under related publication links). We also outline within this document our decision to update the “affordability” principle and rename it “consumer impact” to better reflect its intended purpose and contents. Response Overview In general, stakeholders were supportive of our approach to the fair pricing and cost allocation guidance, noting that a flexible approach is required given the level of maturity of the sector and the initial phase of the introduction of regulation. Several stakeholders also commented positively on the proportionate approach taken. However, stakeholders requested further clarity on some of the definitions and further insight into practices that would be deemed acceptable or unacceptable under the framework and cost allocation. Respondents highlighted the need for further guidance, requesting the provision of practical examples and best practice documents to support their understanding of how to comply with the principles set out in the guidance. Some also sought more tailored guidance for specific segments of the market, such as not- for-profit and unmetered networks. 4 Decision Heat networks regulation: price protections draft guidance decision In particular, the question of what constitutes fair and reasonable returns generated extensive feedback. Several stakeholders sought further clarity, while a few expressed strong reservations about our proposals. We support heat networks earning a fair return that reflects investment risk, performance, and their capital-intensive nature, while ensuring consumer protection. To better understand market dynamics, we will monitor profitability across the sector, recognising the limitations of this approach and that high profitability does not necessarily indicate disproportionate pricing. Efficiency improvements should deliver benefits for both consumers and businesses. Respondents raised concerns regarding overlaps with the Heat Networks Technical Assurance Scheme (HNTAS) and interactions with the Landlord and Tenant Act 1985. We recognise the interaction with HNTAS and are continuing to collaborate with DESNZ on this. We acknowledge that the framework may need to consider existing housing legislation and this has been considered when drafting the guidance. Heat network regulation has complex interactions with housing legislation across GB, and we are continuing to work with stakeholders to ensure we understand these and are aware of how any proposed reforms in housing could have impacts for heat network regulation. We have been working with industry and across government to understand the interaction with existing Landlord and Tenant Act. As part of the Heat networks regulation: implementing consumer protections Government response (‘2025 ICP government response’), DESNZ set out that they are working with the Ministry for Housing, Community, and Local Government (MHCLG) , as well as the Welsh and Scottish Governments, closely to further explore options for unbundling heat charges from housing charges. 5 Decision Heat networks regulation: price protections draft guidance decision Introduction Context The 2018 CMA (Competition and Markets Authority) study conducted into heat networks did not find evidence of systemic high prices across the market, compared to those paid by consumers on gas or electricity, nor did it identify at that time an urgent need for intervention to reduce prices. However, the CMA study did recognise there were some pockets of higher pricing and recommended that the sector be regulated, that the regulator should monitor prices to ensure they were not excessive and that the regulator should require that all heat networks comply with ‘principles-based’ rules or guidance on pricing. However, we recognise that there have been wholesale energy price rises since the CMA study was published which may have significantly impacted this market, and not all the findings from 2018 may still be valid today. We have also received more recent anecdotal evidence of high prices in the market. The government expects the sector to grow rapidly in the coming decades, and we are committed to facilitating that growth, whilst ensuring good consumer outcomes and standards across the sector. Our fair pricing policy, as outlined in previous consultations, seeks to achieve good consumer outcomes, such as reliable heat and good customer service, at a fair price, whilst balancing good industry outcomes, such as sector growth. We aim to achieve the consumer outcomes whilst also improving transparency and ensuring that consumers are protected from disproportionate pricing and monopoly power through an outcome- based approach. This approach also supports growth and investment in a nascent market by recognising variation across the sector and providing proportionate, largely non-prescriptive guidance. Our primary focus is addressing pricing issues where these arise, whilst keeping any burdens on heat networks to a proportionate level. Our approach aims to balance consumer protection, through ensuring they are not subject to disproportionate pricing, with minimising regulatory burden on heat networks, such that the cost of compliance does not itself significantly increase customer bills. In addition to protecting against instances of disproportionate pricing, our fair pricing guidance, along with our data reporting initiatives, will help us identify if there are systemic issues of disproportionate pricing in the market. This will also inform future policy development. In August 2023, a joint consultation was conducted by Ofgem and DESNZ on Heat networks regulation – consumer protection to inform secondary legislation and Authorisation Conditions (‘2023 consultation’). An additional joint consultation, the 2024 ICP consultation, was launched building upon the 2023 consultation. In these consultations and the subsequent government response, we outlined the policy proposals of the fair pricing framework. 6 Decision Heat networks regulation: price protections draft guidance decision These proposals were developed further in two recent Ofgem consultations, the November 2024 Heat networks regulation: authorisation and regulatory oversight (‘2024 ARO consultation’), which sought views on definitions, registration processes, and data, and the 2025 fair pricing consultation. In September 2025 we published and consulted on our first draft guidance document, focusing on the topics of fair pricing and cost allocation, to seek specific feedback on our issued guidance from stakeholders. References to previous publications This document makes references to the following previous consultations and government responses: The ‘2020 consultation’ refers to the Heat networks: building a market framework consultation published in 2020, which informed the provision in the Energy Act 2023. The subsequent government response is referred to as the ‘2021 government response.’ The ‘2023 consultation’ refers to the Heat networks regulation: consumer protections consultation published in August 2023, which informed the Heat Networks Market Framework Regulations SI (2025 HNMFRGBR SI). The subsequent government response is referred to as the ‘2024 government response.’ The ‘2024 ICP consultation’ refers to the Heat networks regulation: implementing consumer protections consultation published in November 2024. The subsequent government response is referred to as the ‘2025 ICP government response.’ The ‘2024 ARO consultation’ refers to the Heat networks regulation: authorisation and regulatory oversight consultation published in November 2024. The subsequent decision document is referred to as the ‘2025 ARO decision’. The ‘2025 fair pricing consultation’ refers to the Heat Networks regulation: fair pricing protections consultation published in April 2025. The subsequent response document is referred to as the ‘2025 fair pricing response’. The ‘2025 fair pricing draft guidance’ refers to the Heat networks fair pricing and cost allocation draft guidance. The accompanying consultation that this document is responding to is referred to as the ‘2025 fair pricing guidance consultation’. The final guidance that will be published alongside this response will be referenced as ‘2025 fair pricing guidance’. Our decision-making process We received 38 responses to our consultation. We asked stakeholders to provide answers to 37 questions and considered all views presented. Whilst not every response we received for each individual question has been outlined in our summaries, we have considered and noted all responses during our analysis and response development. We 7 Decision Heat networks regulation: price protections draft guidance decision recognise that some individual responses represent collective views, and we have considered this in our response and analysis. We have aimed, where possible and appropriate, to keep summaries succinct, aiding the readability and conciseness of the document. Our Decision We have considered responses to the consultation and provided our response under individual chapters. 8 Decision Heat networks regulation: price protections draft guidance decision 1. Fair Pricing Framework Section summary In the previous consultation, we outlined draft guidance on how to interpret the fair pricing authorisation condition. The authorisation condition imposes the general obligation on authorised persons to provide prices that are fair and not disproportionate through an outcomes-based approach. The draft guidance introduced a framework built around six key principles designed to achieve its overarching objective and deliver a set of six positive consumer outcomes, as well as one industry outcome. These principles were: cost reflectivity, cost efficiency, fair and reasonable returns, affordability, regulatory control, and price transparency. However, to avoid confusion and unintended consequences, we have updated the affordability principle, which is now called ‘consumer impact’. The draft guidance sets out minimum expectations and, in some cases, examples of best practice for each principle, and explains how we would assess whether charges are fair and not disproportionate through the application of a fairness test. Stakeholders generally supported the proposed regulatory approach and the high-level principles. However, many requested greater clarity in certain areas. The following section summarises stakeholder responses by question and sets out our position in response. Question Analysis Q1. Do you agree, partially agree, or disagree with the proposed guidance in relation to the cost-reflective principle? Q2. Do you have any suggestions to improve guidance in relation to the cost- reflective principle? Table 1: Response summary for consultation question 1 Response Agree Partially agree Disagree Number Percentage 14 17 2 37% 45% 5% No response Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 13% 5 1.1 The majority of respondents either agreed or partially agreed with our proposal, with 32 leaving comments. Several participants welcomed the iterative approach, encouraging Ofgem to maintain ongoing engagement with the industry post go- 9 Decision Heat networks regulation: price protections draft guidance decision live to support a deeper understanding of the market and to further enhance the guidance, particularly by incorporating relevant examples as they become available. 1.2 A few respondents thought that implementing cost-reflective pricing could increase bills for many customers, especially due to existing cross-subsidisation practices within the sector. Others thought costs should be transparent and broken down to ensure cost-reflectivity. 1.3 Several stakeholders requested greater clarity regarding which specific costs are deemed acceptable to pass on to customers, and sought further explanation on acceptable pricing methodologies under the cost-reflectivity principle. This was particularly relevant for smaller networks, not-for-profit organisations, those with hybrid ownership structures, as well as operators employing ‘price promise’ or counterfactual pricing strategies, and those setting prices at a portfolio level. 1.4 A minority of respondents wanted further clarification on the guidance’s statement that ‘consumers should pay for the additional costs they impose on the system’, and one respondent felt the guidance was unclear about how cost- reflectiveness would be balanced with protections for affordability. 1.5 Some respondents argued that the guidance should do more to encourage the adoption of metering, given its potential to enhance efficiency, while others proposed minor, practical changes to the guidance, such as rephrasing certain sections for greater clarity and adding cross-references to related areas. 1.6 One respondent contended that meaningful implementation of cost-reflective pricing would not be achievable without changes to existing housing legislation and the introduction of new laws to permit varying existing leases, since costs are often included in service charges. Ofgem response Respondents in general welcomed the iterative approach and encouraged continued engagement post go-live. We will continue to engage with stakeholders as the regime is implemented and will keep guidance under review, updating it where necessary to reflect market developments and feedback. Price increases Regarding the concern around the cost-reflectivity principle resulting in increased prices in cases where an operator may be subsidising the network, we reiterate our position that the operator may still decide not to increase prices if they believe it benefits consumers and has clear rationale. We would not consider this, on its own, to breach the fair pricing principles. These principles should be considered in a manner consistent with the overarching objective and achieving the consumer outcomes. This may involve balancing different principles, such as (but not limited to) cost reflectivity and affordability, where appropriate. 10 Decision Heat networks regulation: price protections draft guidance decision Transparency We agree that costs should be transparent and our guidance states that, in terms of best practice, we expect authorised persons to be transparent in cost reporting. Furthermore, guidance on what information should be provided to customers is included in the ‘billing and transparency’ guidance which is part of the wider consumer protections guidance (see related publication links on this document’s webpage). In addition to this, we are developing our pricing data reporting framework, including proposals to collect cost information such as operating expenditure from heat networks. Our consultation on regular data reporting draft guidance has recently closed and can be found here. Clarity, metering and interdependencies Some respondents requested further clarity on what the guidance meant by the statement that ‘consumers should pay for the additional costs they impose on the system’. Further information has been provided in the guidance, including further considerations about balancing cost-reflectiveness with affordability. The fair pricing guidance does not impose an obligation to install meters. Currently, metering is regulated under the Heat Network (Metering and Billing) Regulations. New metering requirements will be set out in HNTAS. Therefore, we do not consider it necessary to provide additional guidance on metering beyond what was already included in the draft guidance. We acknowledge that certain proposals in this framework have dependencies on the unbundling of individual heat charges from wider charges such as rent. For more information on these proposals please see 2025 ICP government response. We have carefully considered the suggested small, practical changes to the guidance, and some have been incorporated. Q3. Do you agree, partially agree, or disagree with the proposed guidance in relation to the cost efficiency principle? Q4. Do you have suggestions to improve guidance in relation to the cost efficiency principle? Table 2: Response summary for consultation question 3 Response Agree Partially agree Disagree No response 11 Number Percentage 12 19 1 6 32% 50% 3% 16% Decision Heat networks regulation: price protections draft guidance decision Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 1.7 The majority of respondents agreed or partially agreed with our proposal, with 28 respondents providing comments. 1.8 Some respondents welcomed the iterative approach to developing the guidance and encouraged continued engagement with industry post go-live to deepen market understanding and enhance the guidance with more detail and best practice examples. 1.9 Several respondents raised a lack of incentive mechanism to drive efficiency. They argued that this could increase prices and make the sector less attractive to invest, and that financial incentives in the form of retention of some efficiency savings via increased profits should be allowed. 1.10 Some stakeholders raised concerns of potential conflict or overlap with HNTAS and urged Ofgem to ensure this does not happen. Some suggested that HNTAS compliance should provide assurance that sufficient investment in technical efficiency has been made. One respondent proposed that future guidance should explain interactions between the Fair Pricing Framework, HNTAS, and housing law in relation to cost efficiency. 1.11 Some respondents noted that achieving efficiency requires significant capital investment and might result in higher costs in the short and medium term. A few sought further clarity in relation to the funding required, for example: • • • whether it would be appropriate for heat suppliers to raise improvement funds, for example, as part of a long-term plan whether this could be done through the heat tariff whether this capital should come from tariff or service charges, noting that there are distributional impacts to be considered 1.12 Some respondents sought further clarity on how efficiency will be assessed in practice, with a minority raising concerns about measuring efficiency by comparison given networks’ different characteristics. Suggestions included providing examples about acceptable evidence of efficiency, such as: • • • benchmarking against similar networks demonstrating competitive procurement showing year-on-year performance improvements worked examples showing efficient management for different network sizes 12 Decision Heat networks regulation: price protections draft guidance decision • efficiency expectations should be flexible and relative to factors such as scale, technical legacy and age of the network 1.13 One respondent said that social landlords are bound by procurement regulations and value-for-money tests under the Public Contracts Regulations 2015 and the Regulator of Social Housing’s Value for Money Standard, and that we should acknowledge compliance with these regimes as evidence of efficient procurement. They also thought that the guidance should recognise the Landlord and Tenant Act 1985 (sections 18 -30) as an existing framework for assessing cost reasonableness. 1.14 Some respondents sought greater clarity on efficient procurement practices. They asked for assurance that selecting options other than the lowest-cost bid can be justified where this delivers better outcomes and noted that exceptions to market- testing may be appropriate where only one provider can realistically compete, consistent with public procurement rules. Some respondents highlighted the use of portfolio-level framework agreements, arguing these can deliver value for money through volume discounts and reduce the relevance of network-level assessments. They requested confirmation that such approaches are legitimate. One respondent also raised concerns about procurement constraints arising from housing legislation, such as consultation requirements, and asked that these be acknowledged. 1.15 One respondent sought to clarify how we will treat higher costs arising from decarbonisation upgrades or compliance investment which are not inefficiencies but essential obligations under the Energy Act 2023. 1.16 Respondents proposed several improvements to the guidance. Suggestions included minor wording changes to ensure neutrality, and additions to the guidance to improve cost-efficiency beyond focusing on current performance, such as: • • • promoting forward planning encouraging periodic market testing to assess outsourcing versus in-house delivery encouraging continuous improvement through collaborative purchasing Ofgem response We note the feedback regarding the absence of a defined incentive mechanism to drive efficiency. We are not establishing a price control process, so we do not consider it appropriate to introduce a formal incentive framework. However, we agree with the principle that operators should be able to retain some efficiency savings in the form of profit. Our fair pricing principles are not prescriptive and provide the flexibility for 13 Decision Heat networks regulation: price protections draft guidance decision increased profit to be made, for example in cases of exceptional performance. Further detail has been included in the guidance to make this point clearer. Technical and cost efficiency For detailed technical standards and best practices, we refer to the HNTAS, which is being jointly developed by DESNZ and the Scottish Government. Once HNTAS requirements are further defined, we may review our guidance to enhance clarity if needed. It is worth clarifying that, whilst the fair pricing principles introduce a general expectation that heat networks should operate efficiently, we will not be setting the level of technical efficiency standards under the fair pricing framework, as this is the role of the forthcoming HNTAS. We will not consider efficiency in isolation but alongside other factors such as prices, profit, and relevant network characteristics. Guidance has been amended to make this point clearer. Furthermore, we acknowledge that different heat networks will have varying levels of technical efficiency, which may result in legitimate differences in pricing. The guidance makes it clear that these factors will be considered when assessing whether prices are fair and proportionate, to ensure fair comparisons. We acknowledge the feedback that achieving efficiency may require significant capital investment, which could lead to higher costs in the short and medium term. We expect operators to plan improvements in a way that balances the need to achieve efficiencies and long-term sustainability with the principle of affordability. This can be achieved by, for example, planning, adopting a long-term approach, and considering making incremental improvements where possible and beneficial. The guidance does not prescribe how improvement funds should be raised. In relation to the use of service charges to recover heat network costs, we refer to our policy on unbundling charges (pg. 88 Heat networks regulation: implementing consumer protections - Government response). Compliance with existing regulations We note the suggestion that the guidance should recognise compliance with existing regulation as evidence of efficiency or cost reasonableness. Whilst we acknowledge that these frameworks may include value-for-money considerations and apply to certain heat networks, we expect authorised entities to take responsibility for ensuring compliance with all relevant legislation within their scope. In principle, compliance with other regimes does not remove the need to follow this sector-specific guidance, although it may be a factor we consider when assessing whether prices are fair and not disproportionate. However, if issues between the application of our guidance and other existing regulations arise these will be considered on a on a case-by-case basis. On the allowance for recovery of costs necessary for compliance with existing legislation, the framework does not intend to stop the recovery of legitimate costs. 14 Decision Heat networks regulation: price protections draft guidance decision However, as mentioned above, measures to minimise the impact on consumers’ bills, such as good planning and incremental upgrades where possible and beneficial, are encouraged. Clarity Regarding the feedback from stakeholders seeking greater clarity on efficient procurement practices, the guidance sets out expectations of what best practice looks like, but it is not prescriptive. We acknowledge that portfolio-level framework agreements can, in principle, deliver value for money through economies of scale and volume discounts. Generally, heat networks are expected to be able to justify their procurement approach and demonstrate how it aligns with the fair pricing high-level objective, principles, and consumer outcomes. We have carefully considered the proposed improvements to the guidance. Some of these suggestions have been incorporated into the final version, including changes that strengthen clarity and support good practice. Q5. Do you agree, partially agree, or disagree with the proposed guidance in relation to the fair and reasonable returns principle? Q6. Do you have suggestions to improve guidance in relation to the ‘fair and reasonable returns’ principle? Table 3: Response summary for consultation question 5 Response Agree Partially agree Disagree Number Percentage 6 17 11 16% 45% 29% No response Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 10% 4 1.17 A majority of respondents agreed or partially agreed with our proposals and 34 respondents provided comments. 1.18 A minority of respondents said that this area could be developed further in future iterations of guidance to gain understanding of investment risk and investment performance, so judgement can be sufficiently informed when deciding a fair and reasonable rate of return. 1.19 15 respondents raised concerns that the guidance provides insufficient detail on what constitutes an acceptable level of return in practice, or on how this would be 15 Decision Heat networks regulation: price protections draft guidance decision assessed. Respondents typically argued that sufficient clarity on this is needed to give investors the confidence to commit capital. Others had concerns that the guidance might not provide sufficient protection to consumers. Whilst there is consensus among these respondents that further clarity is needed, some agreed with our current approach of not setting specific levels, and others favoured greater definition. Proposals to address these concerns included: • • • • • • a notional upper limit providing indicative reference points such as typical range of returns further clarity, including examples, on how we would evaluate and compare returns providing reassurance that an acceptable level of return will be understood in the context of achieving a sufficient return on capital providing further clarity on how this provision aligns with the forthcoming heat network zoning legislation providing clearer guidance on how government funding should be reflected in pricing and margin calculations 1.20 Some respondents said that returns should be assessed over the long term, not on a single year basis. They argued that heat networks have long investment cycles, and returns naturally vary year-on-year depending on investment requirements and operational performance. 1.21 Several respondents said that the guidance should be updated to reflect the reality of not-for-profit networks. Respondents proposed: • • • ensuring the principle is compatible with the regulatory obligations placed on housing providers, notably the Landlord and Tenant Act obligations. defining not-for-profit acknowledging reinvestment models, where returns are reinvested into services and resident support, not distributed as profit 1.22 One respondent requested further clarification on how returns are assessed for organisations with management responsibilities under lease agreements, noting that energy management costs and profits may be intertwined with the cost and profit related to delivering other services. 1.23 Some respondents thought that if customers are being charged proportionately, the profitability of the network should not be relevant on its own. 16 Decision Heat networks regulation: price protections draft guidance decision 1.24 A minority of respondents argued that our current proposal introduces an effective profit cap through principles, as the guidance implies there is a profit level above which profit is deemed to be unfair, which can deter investment into the sector. 1.25 One respondent disagreed with the proposal to monitor profit levels, arguing that we should not investigate cases where profit levels were higher than what we would expect, given the lack of clarity around what is considered ‘fair and reasonable’. Furthermore, they said that monitoring would send a strong signal to investors that this is the first step towards full price and profit regulation without due regard to level of risk. They further argued that we do not regulate profit in gas and electricity markets, but return on investment. Finally, they stated that networks should be able to earn a fair and reasonable return that reflects the risks faced by them, and this should be led by the market and not the regulator. To protect consumers, they proposed a tariff cap based on external benchmarking approach. 1.26 One respondent said that capping profits at the ‘risk associated with the investment level’ would reduce incentives to increase efficiencies. 1.27 One respondent proposed to strengthen the principle by publishing analytical tools for assessing returns, requiring disclosure of capital and financing, and mandating clearer reporting of profitability drivers. Where operators claim exceptional performance to justify higher returns, those claims must be evidenced by consumer outcomes. Ofgem response We note the feedback requesting greater clarity on what constitutes an acceptable level of return. We also note that a minority of respondents disagreed with the inclusion of profit considerations in the pricing framework. Regulatory approach Profit is a key factor in pricing under monopoly, and as such, we believe consideration of profits needs to be included in any pricing framework. As a heat network customer does not have the option to change supplier or operator and face high financial and practical barriers to disconnect from their heat network supplier, there is minimal competitive pressure. Without regulation, heat networks could raise prices by increasing profits above what would be expected in a competitive market, which would harm consumers. Though we believe it is important to consider profit as part of our principles-based approach, we are not introducing direct regulation of profits or returns on investment. Our principles-based approach to regulation seeks to ensure both investor confidence and consumer protection, while maintaining flexibility to reflect the diverse circumstances of heat networks. This approach means the guidance remains high- level, and it does not set specific profit levels. Instead, heat networks are expected to 17 Decision Heat networks regulation: price protections draft guidance decision have regard to the principle that profits should be fair and reasonable in relation to risks and performance. We recognise that heat networks are capital intensive and have their own risk versus reward profile. Profit levels will also vary based on factors such as performance, ownership model, and market conditions over time. The guidance makes clear that we support networks earning a fair return that reflects these considerations. We will monitor profitability across the sector to better understand the market and the drivers behind pricing decisions. However, we acknowledge the challenges and limitations of monitoring profits, as data may be limited and higher profitability does not necessarily indicate disproportionate pricing. This approach allows us to take account of the complexity and variability across projects, rather than applying a one-size-fits-all limit. It also ensures that returns are understood in the context of achieving a sufficient return on capital, while protecting consumers from unfair and disproportionate charges. In addition to the above, we believe that providing estimates without good data would not be appropriate and would risk sending the wrong signals to the market. We agree in principle that the timing of returns is an important consideration when looking at profits, given the long-term nature of heat network investments. We will explore how best to incorporate this into our methodology. Industry outcome We have updated the ‘industry outcome’ in the guidance to make clear that sector growth is a desired outcome of this framework, and that a fair return for investors is a key element of achieving this, alongside ensuring consumers have confidence in the sector through fair pricing. Not-for-profit networks Some respondents suggested that the guidance should be updated to reflect the reality of not-for-profit networks. The guidance recognises that the fair and reasonable returns principle is not relevant for authorised persons operating under a purely cost recovery model, as defined in Table 2 within the fair pricing guidance. At the same time, the guidance is intended to be high-level and flexible enough to apply to networks that do not follow a strictly cost recovery approach, for example, where returns are reinvested into other services or resident support. For more detailed discussion on the relevance of profitability assessments for not-for-profit networks please see ‘chapter 4. Profitability analysis’ of the 2025 fair pricing response. Existing legislation The guidance does not override any existing legislation, including obligations under the Landlord and Tenant Act. We do not consider that a formal definition of ‘not-for-profit’ is required for the first iteration of the guidance, as these are not categories used for 18 Decision Heat networks regulation: price protections draft guidance decision market segmentation. However, we will take the individual circumstances of networks into account when considering compliance and enforcement. Other comments In relation to the proposal to introduce a tariff cap based on an external benchmark as an alternative to including profit within the framework, we maintain our position not to include such a tariff cap, as set out in our previous response document. Given the diversity of the market, a single counterfactual based on alternative heat sources is unlikely to reflect competitive prices for many networks, particularly over time. This approach risks networks pricing above a more competitive level. However, we do intend to use external benchmarks as part of our benchmarking methodology. Q7. Do you agree, partially agree, or disagree with the proposed guidance in relation to the affordability principle? Q8. Do you have suggestions to improve guidance in relation to the affordability principle? Table 4: Response summary for consultation question 7 Response Agree Partially agree Disagree Number Percentage 14 14 4 37% 37% 10% No response Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 16% 6 1.28 This question was generally supported by respondents with 74% in full or partial agreement with the proposed guidance in relation to the affordability principle. Stakeholders generally supported the inclusion of affordability as a core principle, highlighting its role in protecting consumers, particularly those in vulnerable situations. Respondents emphasised that prioritising affordability could help safeguard against excessive costs and bolster consumer confidence in the sector. 1.29 A minority of stakeholders questioned whether a separate affordability principle added value and argued that it introduces subjectivity and greater uncertainty for potential investors. They recommended that Ofgem focus on enforcing the existing core principles and consider affordability as part of the overall consumer outcomes. 1.30 A few responses requested more clarity on the definition of affordability, with stakeholders emphasising the need for a clear and measurable methodology. One 19 Decision Heat networks regulation: price protections draft guidance decision respondent suggested that affordability should be based on income levels, specific energy needs (including health-related requirements), and differences in regional costs. Many respondents expressed a desire for further operational guidance and best practice examples, particularly in relation to debt management, back-billing, cost passthroughs and shock bills. 1.31 Some stakeholders noted that the guidance does not adequately address the potential conflict between the affordability principle and other core principles, such as cost reflectivity. They highlighted a scenario where a network’s genuine costs result in charges that are deemed unaffordable and questioned what the resolution would be. 1.32 Many stakeholders raised the topic of cross-subsidisation, expressing that the proposed guidance could benefit from greater clarity on what would be acceptable and how it would be determined whether consumers faced ‘disproportionate prices’ as a result. Many respondents advocated for guidance and examples that include real-world scenarios illustrating best practices and circumstances where cross-subsidisation would not be accepted. On a similar topic, some respondents also requested further clarity on the acceptance of portfolio-level pricing, particularly where organisations manage networks with varying levels of technical efficiency and/or underlying costs, which may have the interpreted effect of resulting in ‘disproportionate pricing’. 1.33 Other general recommendations and improvements suggested by respondents included adapting and extending existing fuel poverty schemes and financial assistance programmes, such as the Warm Home Discount and Winter Fuel Payment, to better support heat network customers. Clear explanations and worked examples of how affordability interacts with housing law. Guidance on how operators should evidence the consideration of affordability in tariff decisions. Ofgem response We welcome the broad support from stakeholders on the proposed guidance in relation to the affordability principle, echoing our views that having regard to affordability is particularly important for the protection of consumers in vulnerable situations. We note, however, that some confusion about the scope and objective of this principle remained. This is in part due to the term ‘affordability’ being interpreted differently by different stakeholders, raising significant concerns that the principle would be misinterpreted in future. In light of these considerations, we have decided to update this principle and rename it ‘consumer impact’. These changes better reflect the intended purpose and content of the principle and helps distinguish it from wider policy discussions on individual consumer affordability. Importantly, the underlying principle and the areas it covered remain the same, and authorised persons are still expected to have regard to consumers’ benefit and best interests as previously proposed. 20 Decision Heat networks regulation: price protections draft guidance decision Affordability principle On the need for an ‘affordability’ principle, in the 2025 fair pricing consultation and 2025 fair pricing response we clarified that this principle is in relation to what is within the control of heat networks, such as reducing the likelihood and impact of shock bills. While some of these measures will be covered under principles such as cost efficiency, not all measures, such as reducing the impact of shock bills, would fit under other principles. Clarity, definitions and guidance Some respondents requested more clarity on the definition of affordability. We recognise that a clear understanding of affordability is essential to ensure authorised persons are able to implement the principle effectively. We also recognise some aspects of affordability will be partly beyond the control of heat networks, such as high wholesale energy prices. In our draft guidance, we outline that affordability relates to ensuring that charges for heat are fair and reasonable, considering what is within the control of heat networks. This involves practices such as taking steps to minimise the likelihood and impact of shock bills, and ensuring that payment terms and support arrangements are in place for those who may struggle to pay. While some aspects of affordability are addressed under other principles such as cost efficiency, the affordability principle specifically focuses on the consumer’s ability to pay, particularly for those in vulnerable circumstances. This is complementary and consistent with guidance around those in payment difficulty and the vulnerability protections. Stakeholders also expressed interest in operational guidance and practical examples around several affordability related topics such as debt management, back-billing, cost passthroughs, shock-bills and cross subsidisation. At this stage, we will not be able to provide further operational guidance, in the form of templates and examples within the first iteration of guidance. As regulation commences and we obtain further information and data from the market, we will evaluate our existing guidance and consider the development of supportive tools such as templates and practical examples. Conflict between principles Respondents raised the potential conflict between the affordability principle and other core principles. We recognise that, in practice, there may be occasions where the affordability principle, now known as the consumer impact principle, may be in tension with other core principles, such as cost-reflectivity. Our proposed approach, as set out in the 2025 fair pricing draft guidance and our 2025 fair pricing response, is that these principles should be considered in a manner consistent with the overarching framework objective. This may involve balancing different principles where appropriate such that it yields the most favourable outcome for consumers. 21 Decision Heat networks regulation: price protections draft guidance decision Q9. Do you agree, partially agree, or disagree with the proposed guidance in relation to the regulatory control principle? Q10. Do you have suggestions to improve guidance in relation to the regulatory control principle? Table 5: Response summary for consultation question 9 Response Agree Partially agree Disagree Number Percentage 19 9 1 50% 24% 3% No response Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 24% 9 1.34 Stakeholders displayed general support for the proposed guidance in relation to the regulatory control principle, with 74% of respondents fully or partially agreeing. Most respondents recognised the importance of regulatory control in ensuring fairness, transparency and accountability in heat network pricing. They emphasised that the principle is an important inclusion within the pricing framework. 1.35 The most common theme amongst respondents to this question was the need for greater clarity in guidance regarding specific sections of the market and recommendations on useful additions to further support heat networks in complying with the regulatory framework. 1.36 One respondent requested clarity on expectations of not-for-profit providers within the framework. They highlighted the need for Ofgem to tailor compliance pathways to reflect the financial models and resident demographics of social housing schemes. Another respondent suggested that the guidance should clarify that the guidelines are limited to services related to delivering regulated services, as opposed to wider supply chains necessary for running a business but not connected to the regulated service. 1.37 Several stakeholders raised the topic of examples and standardised templates in relation to this principle’s guidance. They recommended that guidance could benefit from the inclusion of practical examples, such as detailed tendering criteria to assess contractors’ ability to understand and comply with regulatory obligations as well as guidance on checks that networks can employ to ensure compliance. 1.38 Some respondents raised points related to the consideration of legacy and pre- existing contracts at the point of regulatory commencement. One respondent 22 Decision Heat networks regulation: price protections draft guidance decision questioned Ofgem’s consideration of the period between guidance publication and subsequent enforcement of the Authorisation Conditions (ACs), whilst another respondent recommended the inclusion of a ‘transition period’ within the principle that would allow suppliers to make necessary adjustments to contracts at more appropriate and natural times. They cited the approach outlined in paragraph 5.19 of the guidance on consumer protection as a precedent. Ofgem response We welcome the support for the proposed guidance on the regulatory control principle and the acknowledgement that the principle is an important component of the fair pricing framework in ensuring fairness, transparency, and accountability. Guidance clarification One respondent considered that we should be clear that the guidance is limited to the delivery of regulated services and not to the wider supply chain. We appreciate the need for clarification on this and have amended the wording of the principle’s definition in the guidance to reflect this. Several stakeholders questioned the treatment of legacy contracts at the point of regulatory commencement. We are aligned with the consumer protection guidance in that we do not expect existing contracts to be changed by the date of regulatory commencement. We would expect suppliers to make necessary changes to supply contracts at a time when it is natural to do so. For more information on how legacy arrangements are treated in the framework, please refer to the legacy arrangement subsection of the cost allocation guidance. Templates and examples At this stage we are unable to provide standardised templates and examples in the first iteration of guidance. As regulation commences and we obtain further information and data from the market, we will evaluate our existing guidance and consider the development of supportive tools such as templates and practical examples. Q11. Do you agree, partially agree, or disagree with the proposed guidance in relation to the price transparency principle? Q12. Do you have suggestions to improve guidance in relation to the price transparency principle? Table 6: Response summary for consultation question 11 Response Agree Number 14 Percentage 37% 23 Decision Heat networks regulation: price protections draft guidance decision Partially agree Disagree 10 8 26% 21% No response Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 16% 6 1.39 The respondents broadly agreed with the proposed guidance in relation to the price transparency principle and 28 respondents provided comments. 1.40 Among the respondents who agreed, a minority expressed explicit support for clear and accessible communication of prices. Alternative formats for digitally excluded consumers were requested. 1.41 Respondents raised concerns that overly technical disclosures or comparisons could mislead consumers and trigger complaints. It was stressed that simplicity and context should be prioritised. 1.42 Several respondents requested the provision of materials enhancing price transparency, such as standardised tariff formats, examples and templates for billing to ensure consistency and clarity. It was suggested that a standard tariff disclosure template showing information such as fixed and variable charge components, cost breakdowns and other costs included in tariffs, can be provided for consistent comparison between heat networks. Guidance could also specify the minimum level of information. 1.43 Some respondents requested further details and descriptions on best practices and the level of detail required to meet transparency standards set out in the principle. 1.44 One respondent suggested that pre-contractual transparency should be covered in the guidance as an additional consumer outcome: ‘consumers are able to make informed choices before buying or renting a heat network property.’ 1.45 A minority of respondents urged that market diversity should be recognised explicitly in the guidance in relation to price transparency. They mentioned the need for flexibility and that expectations should be set out for different groups, such as unmetered properties and shared ground loop (SGL) networks with simple charge structures. 1.46 A few respondents emphasised the need to align guidance with existing housing legislation (such as the Landlord and Tenant Act 1985), particularly for social landlords, to avoid duplication or inconsistency. They queried on how the transparency obligations would interact with existing housing regulations and service charge frameworks. 24 Decision Heat networks regulation: price protections draft guidance decision Ofgem response We welcome the broad support for the price transparency principle. Importance of balance and context We agree that transparency must be meaningful and accessible to consumers, and not overly technical or burdensome. As set out in both our consumer protection and fair pricing protection guidance and response, our aim is to ensure consumers can understand their charges and have confidence that they are fair. We recognise the need to balance information and clarity with simplicity. We will develop central price transparency proposals alongside billing transparency. We will also develop supporting materials for consumers to achieve this balance. Future work will include undertaking further engagement and research to ensure that the proposals are effective in practice and deliver clear value to consumers. Demand for more details, examples and best practice We are considering the suggestion to include standardised formats and templates to support consistent and clear communication of tariffs, for example this involves: • heat network entities presenting billing information to customers: billing transparency proposals • heat network entities reporting pricing information to Ofgem: basic pricing data from heat network entities through regular data reporting via a digital platform (see regular data reporting draft guidance for details) • Ofgem presenting pricing information to consumers: further engagement and research with consumers shaping the central transparency proposals In parallel to the billing transparency proposals, we will continue to explore ways to move towards more standardised tariff reporting (see regular data reporting draft guidance for details), and subsequently the disclosure of this information centrally. Expectation on unmetered and SGL We acknowledge the diversity of heat networks and agree that expectations should be proportionate. It is our intention that the data reporting journey and publication of data under central price transparency will cater for networks with simpler charge structures such as unmetered properties and SGL networks while meeting transparency expectations. Pre-contractual transparency As highlighted in our consumer protection response, consumers should be able to make informed choices before entering into agreements. We will keep the guidance under review depending on any future work on pre-contractual transparency. 25 Decision Heat networks regulation: price protections draft guidance decision Interaction with housing regulations and existing protections We recognise the importance of aligning our guidance with existing housing legislation, including the Landlord and Tenant Act 1985. We are engaging with MHCLG and DESNZ to explore this interaction further. Future iterations of guidance will clarify how transparency obligations relate to service charge frameworks and will aim to avoid duplication or inconsistency. Q13. Do you agree, partially agree, or disagree with the proposed ‘fairness test’? Q14. Do you have suggestions to improve guidance in relation to the ‘fairness test’? Table 7: Response summary for consultation question 13 Response Agree Partially agree Disagree Number Percentage 11 14 5 29% 37% 13% No response Please note that the above percentages are rounded to the nearest full figure and therefore may not sum up to 100% 21% 8 1.47 The respondents broadly agreed with the proposed guidance in relation to fairness test and 30 respondents provided comments. 1.48 Some respondents questioned whether statistical and economic models can yield objective and robust results given market diversity and current data gaps. Several asked Ofgem to collect more data and market intelligence to prove the objectivity and effectiveness of the tools before application. Data collection of at least two years was suggested. 1.49 Several respondents asked for worked examples and practical case studies showing how the test will be applied including data collection, analysis, and decisions under the test across different network groups, in current or future iterations of this guidance. 1.50 Some respondents requested clearer definitions of ‘fair’, ‘disproportionate’, and ‘reasonable’, or indicative benchmarks and thresholds to reduce disputes. Some respondents expressed concerns that the lack of clarity and high-level guidance that is open to interpretation would become a source of disputes and administrative burden. 1.51 Several respondents also asked how the test will treat different market segments or groups and whether it will apply to legacy contracts. Examples of 26 Decision Heat networks regulation: price protections draft guidance decision these groups include for-profit and not-for-profit networks, new and legacy networks with limited historical data, large urban schemes and small networks. 1.52 Several respondents provided suggestions for improving the guidance, including setting indicative thresholds on disproportionate pricing. A minority of respondents suggested a structured framework to guide case-by-case assessment with clear procedures for resolving disputes on fairness test, and with defined roles for Ofgem, ombudsman and other bodies, should be set out. It was suggested that: • • Ofgem should set out what constitute sufficient evidence for each criterion in the fairness test the inclusion of details on how Ofgem will approach the fairness test during the period where the relevant statistical and economic models referenced are still under development 1.53 One respondent stated that it is important for the guidance to set out the details of ‘best practice in economic regulation’ mentioned in paragraph 1.53 of the 2025 fair pricing guidance consultation as raised by respondents in the earlier consultation. 1.54 A few respondents were concerned that a subjective or opaque test could increase the risks of inconsistent enforcement, create significant risks for investors (risk of ex-post profit clawback), and deter investment. It was also mentioned that applying the test to many standalone networks could become onerous. Some respondents reiterated their suggestion of relying solely on external benchmark to screen for further investigations. 1.55 A few respondents challenged test questions including ‘is the tariff prohibitive to uptake?’ in the test and questioned how it is measured, arguing it conflates decarbonisation objectives with fairness and may misidentify legitimate cost- reflective tariffs as unfair. 1.56 A minority of respondents support prioritising cases that affect consumers in vulnerable circumstances for actions within the fairness test’s prioritisation process. They also recommended more explicit considerations to impacts on vulnerable customers in the framework. 1.57 A minority of respondents asked for proportionality and presumed compliance where existing housing legislations such as the leasehold system already constrain pricing. Ofgem response We welcome the broad support for the proposed guidance on the fairness test and the acknowledgment of its importance in administering the fair pricing framework. 27 Decision Heat networks regulation: price protections draft guidance decision Importance of robust and transparent models We acknowledge stakeholder concerns about the robustness of statistical and economic models used to assess fairness. As set out in our fair pricing consultation response, we will continue to develop benchmarking and profitability assessment tools, informed by best practice in economic regulation. We agree that further data collection and continuous engagement with different parties including stakeholders and specialists are needed in the process of operationalising the fairness test and developing these assessment tools, and we will take a phased approach to implementation. This guidance will be kept under review and updated in the process. Data requirements We agree that reliable data and market intelligence are essential for operationalising and applying the fairness test effectively, and that a certain amount of data will be required for the analysis. Nevertheless, we intend to develop our analysis iteratively based on available data, rather than starting the analysis after collecting perfect data. Please refer to our regular data reporting draft guidance consultation detailing ongoing reporting requirements. Demand for clear definitions, case studies and best practice Whilst we are not defining terms such as ‘fair’ and ‘not disproportionate’, we have outlined how we will apply these concepts when implementing the fair pricing framework. At this stage, we are unable to provide worked examples and case studies to illustrate how the fairness test will be applied across different network types, as the analytical tools and procedures are still under development and will evolve as more data becomes available. We would also like to reiterate that our approach intends to be principle-based and flexible, meaning that it would be inappropriate to provide indicative benchmarks or thresholds as this would risk these being interpreted as binding, making these levels prescriptive in effect. It is our intention that the analytical tools under development will take different network types into account. This guidance will be kept under review and updated in the process. Clear roles, process and dispute procedures, transition to more developed methods We agree that details of price investigation (which is out of scope of this consultation) including the roles of Ofgem, ombudsman, and other bodies, and the transition to more developed methods should be clearly defined and laid out. Please refer to the price investigation chapter in our fair pricing consultation and future consultation on price investigation. Note that the fairness test (which is distinct from price investigation) sets out, at a high level, how we would look to apply the fair pricing authorisation condition and principles effectively and consistently to identify potential cases of disproportionate pricing. It outlines the type of questions we might consider and how tools such as benchmarking could be applied. Where prices for consumers appear to be disproportionate, for example through the outcomes of the fairness test, we will 28 Decision Heat networks regulation: price protections draft guidance decision have the power to investigate. As noted above, for more detail on price investigations, please refer to the price investigation chapter in our fair pricing consultation and our future consultation on price investigation. We will also consider providing examples of evidence for each criterion in the test in future iterations of the guidance. Segmentation We recognise the need to tailor the fairness test to different market segments. Heat networks are required to indicate and update their pricing methodology as part of data reporting (see regular data reporting draft guidance for details) to provide contextual information for interpreting their prices. For example, networks that are charging to recover their costs only should report as ‘purely cost recovery’, and networks with legacy contracts should report this status as part of their pricing methodology. We will ensure that assessments are proportionate and reflect the key characteristics of each segment. For networks with limited historical data, we would like to clarify that we would not collect pricing data from before authorisation conditions are introduced. Please see regular data reporting draft guidance for more information. For other data submissions, please refer to registration guidance and forthcoming HNTAS requirements respectively. Investment uncertainty and incentives We understand concerns about the potential impact of the fairness test on investment. It is our intention that the test is applied transparently and consistently to avoid creating uncertainty or deterring investment, as is reflected in the inclusion of the heat network uptake consideration. Details of the tools used in the fairness test will be subject to future consultation to increase transparency and reduce uncertainty. We will continue to engage with stakeholders as the regime is implemented and will keep guidance under review, updating it where necessary to reflect market developments and feedback. We also believe that our proposed way of prioritising actions is able to reduce the burden on standalone networks. Disagreement on prohibitive to heat network uptake question We note the concerns about including ‘is the tariff prohibitive to uptake?’ in the fairness test. We would like to clarify that fairness test is not only about identifying potential disproportionate pricing, and that this question is not primarily for identification of potential disproportionate pricing. This question is intended as an example of the types of considerations that help inform our understanding of pricing in the sector, based on broader policy outcomes as well as the pricing principles. Our view is that it is important to ensure that heat networks’ behaviour and the general outcomes of the fairness test align with the fair pricing principles and broader policy goals. We will ensure that the test will apply to cost-reflective tariffs appropriately. More