Energy prices continue to be a major concern for households across the UK, particularly as we head into the winter months, and recent global events have understandably raised questions. With ongoing global uncertainty affecting wholesale energy markets, some heat network residents are beginning to see the impact on their heating & hot water tariffs, while others may experience changes in the coming months.
In this update, we want to explain what’s driving current changes, what regulators are doing, and most importantly, what it means for you as a resident on a heat network.
How global events can influence energy prices
You have likely seen news coverage of the continuing conflict in the Middle East. While this may feel far removed from our everyday lives in the UK, it’s having a direct impact on global energy markets.
The UK imports around 37% of its total primary energy. When geopolitical tensions rise, especially in regions that are key to oil and gas production, this can create uncertainty in supply. Markets typically react to this uncertainty by increasing wholesale energy prices. Compared with pre-conflict levels, puts wholesale gas about 50% higher, while Ofgem also increased the price cap on gas wholesale by a further 4% in October, following a 13% increase in July.
While the conflict in the Middle East has caused immediate fluctuations, alternative export routes and other global production sites help keep supplies broadly stable. However, sustained instability could lead to increases in wholesale costs over time, which may then feed through into heating & hot water tariffs.
It is also worth noting that global events are not the only factor influencing wholesale energy prices. Demand also plays an important role. During colder months, households and businesses typically use more gas for heating, increasing demand and potentially pushing wholesale prices higher. When demand is lower and supplies are plentiful, prices generally fall.
Will my heat network tariff increase because of the conflict?
Heating & hot water tariffs do not automatically increase because of overseas conflict or market headlines. Your heat supplier will review your tariff every 6-12 months rather than in response to short-term market changes. This is to ensure that the tariff is reflective of the true cost of maintaining and operating the heat network. Reviews are typically done in line with any upcoming bulk fuel contract renewals and/or significant changes to heat network efficiency.
Many heat suppliers typically procure their bulk incoming fuel through fixed-term contracts, often lasting 12 months or longer. As existing contracts come to an end, heat suppliers must secure new contracts. Depending on the state of the market, this could be at higher rates. These increased costs are then typically reflected in residents’ heating & hot water tariffs.
This means some residents may already be experiencing higher charges, while others may see changes at the next tariff review. The timing and extent of any increase will depend on factors such as the length of your heat supplier’s fuel contract period, wholesale energy costs and the individual network’s operating costs.
Equally, if wholesale energy prices begin to fall, residents may not see an immediate reduction in their tariffs. This is because heat suppliers may still be purchasing energy at previously agreed rates. Any savings may only be reflected when contracts are renewed and tariffs are next reviewed.
Unlike standard gas and electricity tariffs, heat network tariffs may include the cost of any callouts for heating & hot water issues within your property. To understand what else is included and how these compare, read our heat network vs. gas & electricity blog.
What can I do if I’m worried about my energy costs?
Many factors influencing energy prices sit outside individual control. However, there are still practical steps you can take to manage your energy costs.
- Take control of your usage: Small changes can lead to meaningful savings. Take a look at our ‘Resident guide to heating & hot water’ for simple tips on how to reduce consumption. You’ll find examples of where you can make tangible monetary savings across your utilities from page 13.
- Seek support: If you’re finding it difficult to manage your energy costs, you’re not alone, and there’s help available. Aside from speaking with our team, several independent organisations can provide free, impartial advice. Advice is available on on budgeting, efficiency, and access to grants or assistance schemes where available. Read more on this in our ‘Financial support and guidance’ help sheet.
We’ll continue to keep you updated as the situation evolves and as new regulatory developments are introduced. In the meantime, you can find more details on how heat network regulation is changing in our dedicated blog on the current state of heat network regulations.
Greater transparency for heat network tariffs through Ofgem reporting
Unlike domestic gas and electricity customers, heat network residents are not currently covered by Ofgem’s energy price cap. However, regulation is evolving.
From January 2027, heat suppliers will be required to share their tariffs and cost components with Ofgem. This is a positive step toward transparency and will allow Ofgem to assess whether any future rules or price protections are needed for residents on heat networks.
Heat network suppliers and operators are also expected to actively manage risks, secure fair prices, and follow Ofgem’s new fair pricing guidance.
