A market study into domestic heat networks to ensure householders are getting a good deal has been launched.
Heat networks involve the generation and distribution of heat to buildings and consist of communal and district heating.
They currently supply around half a million homes in the UK through 17,000 networks.
The Competition and Markets Authority (CMA) is concerned many customers, a large proportion of whom live in social housing, may be unable to easily switch suppliers.
It believes they could also be locked into very long contracts – some for up to 25 years – and there is a risk they may be paying too much or receiving a poor quality of service.
The competition watchdog will examine three themes: whether customers are aware of the costs of heat networks, whether the networks are natural monopolies and the impact of differing incentives for builders, operators and customers of heat networks and the prices, service quality and reliability of the networks.
Chief Executive Andrea Coscelli said: “Heat networks can play an important role in cutting carbon and keeping down energy bills for customers.
“However, we have concerns that this sector may not be working as it could be for the half a million homes heated by these systems now and the millions that may be connected in the future. That is why we’re taking a closer look at this market to ensure that heat network customers get a good deal on their energy now and in the future.”
The CMA is inviting comments – until 12th January 2018 – on the issues raised from interested parties such as heat network builders, operators, suppliers and their representatives as well as consumer groups.