Heat networks regulation: fair pricing protection guidance
Cost allocation
Summary
In the draft cost allocation guidance section, we outline guidance on the cost allocation authorisation condition.
Details
Cost allocation refers to how heat network suppliers allocate costs to the various charges they levy on consumers, and how prices are structured more generally. Based on the responses from stakeholders in the 2025 consultation, we will be going ahead with providing high-level guidance for cost allocation.
This guidance aims to provide some best practices around broad cost allocation approaches that occur in the market. The proposed best practices are linked to the fair pricing principles that are outlined in Chapter 1 ‘fair pricing principles’ of the Heat networks fair pricing and cost allocation draft guidance.
In addition to the guidance, we will be imposing only one prescriptive rule initially which is that Guaranteed Standards of Performance (GSOP) payments, compensations, fines, penalties and costs of redress provided to consumers should not be passed through to customers.
Before you give us your views
You'll need to read the full details in:
- the cost allocation draft guidance (PDF, opens in a new window)
- the draft cost allocation authorisation condition, which we published in Annex 5 of the response to our Heat networks regulation: fair pricing protections consultation (PDF, opens in a new window)