Step 6 - tariffs and charges
Your Heat Supply Agreement will state the start date for the commencement of the heat supply to your home. We will invoice you quarterly for the heat supply as set out in the Heat Supply Agreement.
On this page we provide a summary of the Heat Network tariffs and other charges.
The heat tariff is the way that we charge you for your heating and hot water. It determines how we bill you each quarter.
We review the heat tariff every five years and cap it using equivalent costs of an oil-fired heating system.
The tariff has two parts:
- Variable charge
- Fixed standing charge
- The variable charge depends on monthly usage of heating and hot water.
- The Heat Meter we install in your home automatically monitors your usage and sends the information to us to help calculate your bill.
- We base the charge on current oil prices. It is indexed to oil prices for the first five years and will then gradually transfer to electricity prices.
Charge per unit - 5.15p / kWh (4.90p + 5% VAT)
Annual cost - dependent on use
We set the initial price by current oil prices (March 2021) using this method:
- 1 litre of oil = 10.3kWh energy
- Typical boiler efficiency is 85%, i.e. only 85% of energy is converted to heat versus unit charge 4.90p/kWh
Equivalent cost per litre of oil calculated as follows:
- 4.90p (energy price)
- x 10.3 (energy in the oil)
- x 85% (boiler efficiency) = 42.9p
= 45.0p/litre, including 5% VAT
Fixed standing charge
- The fixed standing charge is independent of usage of heating and hot water
- It's the equivalent of owning and maintaining an oil boiler - including replacing an average sized boiler at the end of a 15 year life, an annual boiler service and three call-out charges over a five year period (see calculations below)
- The fixed standing charge contributes towards the costs of installing and maintaining the Heat Network, as well as customer and billing services etc
- We will increase the standing charge with inflation each year
- We set the tariff levels based on property size (see calculations below)
|Floor area of property||Annual cost|
|50 - 99m2||£262 (£250 + 5% VAT)|
|100 - 149m2||£332 (£316 + 5% VAT)|
|150 - 199m2||£402 (£383 + 5% VAT)|
|199+ m2||£472 (£450 + 5% VAT)|
- Average oil boiler replacement costs £3,000 and oil tank costs £2,000
- Estimated cost of replacement over 15 year boiler lifetime is £200 per annum
- Annual maintenance and repair costs, estimated £130 per annum
£3,000 divided by 15 years = £200
£200 + £130 = Total annual cost of £330 (£346.50 including 5% VAT)
Charge adjusted for house size, but overall average paid remains at £330 (£346.50 including 5% VAT).
How costs change over time
For the variable and fixed standing charges, they will change annually in January in line with inflation. We base the change on the Consumer Prices Index (CPI) published for October. The Heat Supply Agreement forbids any increase in charges other than in line with CPI. We will reduce charges in line with CPI if it falls.
For the fixed standing charge, we base the change on the whole CPI. For the variable charge, for years one to five, we base the change on the 'liquid fuels' (oil) component of CPI. For years six to ten, change moves to being based on electricity component. From year ten, we only use CPI's electricity component.
The CPI information we refer to above is published monthly on the GOV.UK website.
Other charges you may incur include:
- Abortive call out charge - this applies if you don't provide access to your property during an agreed time for an agreed purpose on more than one occasion
- Debt processing charge - this reimburses us for any costs we face in recovering overdue payments
- Compensation charge - covers the cost of repairing or replacing damaged Heat Interface Units or Heat Meters where the fault lies with the customer
- Cancellation charges
We include in your bill any charges payable by you, or compensation payments owed by us.
For further details on these charges, please read the Heat Supply Agreement.
Meter readings, inspections and maintenance
We take meter readings remotely on a monthly basis.
We will carry out Heat Interface Unit inspections at least once every two years.
You can also request inspections as detailed in the Heat Supply Agreement.
The Heat Supply Agreement also details information on maintenance and response times and performance.
If you have any questions about the tariffs and charges, please get in touch using our Heat Network customer services page.