In the Netherlands, energy supply for commercial and residential premises tenants is increasingly taking the form of a connection to a heat network. These heat networks are often constructed and managed by the municipality in cooperation with specific heat suppliers. This means tenants are sometimes obliged to connect to a central supplier with no choice, unlike electricity or gas. This obligation can lead to questions about rights and responsibilities, waiting times, costs, and the role of regulators such as the Consumer and Market Authority (ACM). This blog discusses what is technically and legally involved in an application for a heat connection and what rules tenants can expect. However, connecting to a heat network can be complex and time-consuming for both private homes and commercial buildings.
What is a heat grid?
A heat network is a network of pipes that transports heat from a central source to homes and businesses. Municipalities encourage heat networks as a sustainable alternative to gas because they use renewable or residual energy. This network’s hot water or steam heats rooms and tap water via a heat exchanger. A heat network can be rolled out on a larger scale in a neighborhood or region.
The municipality often builds a heat network in consultation with the landlord and supplier, requiring tenants to join the chosen heat supplier. This compulsory nature can feel unreasonable for consumers and businesses, especially if the tariffs and services prove less attractive.
The Role of the Heat Act, the Heat Decree, and the Heat Regulations
The Dutch Heat Act regulates the rights and obligations of heat suppliers and consumers, providing essential protection for tenants and other users of heat networks. The law protects consumers from unreasonable tariffs and poor service while ensuring transparency and quality in the heat market. Some crucial aspects of the Heat Act and additional regulations are:
- Tariff regulation: The Heat Act sets a maximum tariff, linked to the gas price. This maximum tariff takes into account the actual costs consumers would have if they used gas as a heat source. According to the Heating Decree, the maximum tariff consists of fixed and variable costs that are calculated annually.
- Vulnerable consumers: The Heat Regulation describes those vulnerable consumers, such as those with health risks, are given extra protection in case of disconnection of heat supply.
- Security of supply: heat suppliers must provide their services reliably and continuously. The supplier must deliver heat reliably and under reasonable conditions, with good quality of service.
- Licensing requirement: Heat suppliers must have a license from the Authority Consumer & Market (ACM) to supply heat. The ACM monitors compliance with the legislation.
- Compensation for outages: The law requires suppliers to compensate consumers of severe outages lasting more than 24 hours, unless caused by force majeure. According to the Heat Regulation, compensation for disruption of 8 to 12 hours is €35 and is increased by €20 for every additional 4 hours. However, there are exceptions to this scheme.
- Shut-off policy: Cutting off heat supply should be avoided as much as possible, especially during winter (1 October – 1 April). Suppliers should give at least three days’ notice of planned interruptions.
- Emergency provision: If a heat supplier can no longer supply heat, the Minister of Economy can intervene by taking emergency measures. This may include appointing another license holder as an emergency supplier to take over the heat supply.
- Transparency and information obligation: The Heat Decree and the Heat Regulations state that suppliers must provide clear, comparable information on tariffs, conditions, and any impact on comfort.
- Dispute settlement: in case of disagreement between consumers and heat suppliers, the Heat Act offers a low-threshold dispute settlement through an independent committee. As a result, consumers do not have to go directly to court.
A new Heat Act
The government is working on a successor to the Heat Act. Its official name is the Collective Heat Supply Act. Currently, the price of heat is more controversial. This is because it is linked to the cost of natural gas. It is also often unclear exactly how energy suppliers calculate their tariffs and whether they are not making unreasonably high profits. Under the new law, tariffs will be based on the actual costs of heat companies plus a maximum profit percentage.
The connection process: step-by-step analysis
When a consumer or company applies for a connection to a heat network, the heat supplier goes through several steps. Here is an overview of the process and the technical requirements involved:
- Initial application and assessment: The first step is to apply to the heat supplier. The latter assesses the application and considers whether establishing a connection is technically and economically feasible. In addition, the supplier checks the suitability of the home or building to be connected, assessing insulation levels and existing installations.
- Technical inspection and design: An approved installer inspects to determine the necessary adjustments. From this, a connection plan is drawn up describing how the pipes and heat delivery system (which controls the heat consumption per connection) will be installed.
- Preparation of a quote and plan: after the inspection, you will receive a quote for the connection cost and any additional adjustments required. The quote usually includes an estimate of the work’s length and a schedule.
- Construction of the connection
- Outdoors: A pipeline from the main heat network pipeline to the building is laid. This may involve excavation work in public areas and private property.
- Indoors: The installation of a heat exchanger replaces the boiler. This heat exchanger transfers heat from the network to the building.
- Adjustments within installation: in most cases, existing radiators and underfloor heating can be retained.
- Adjustment and testing: The system must be carefully adjusted after the connection is physically completed. Temperature and pressure are adjusted, and leaks and faults are checked to ensure the quality of the heat supply.
- Disconnection of gas connection: In many cases, especially in new homes, the gas connection will be permanently disconnected, as heating and hot water will now be supplied via the heat network.
- Aftercare and maintenance: the heat supplier usually offers a service and maintenance contract after installation. This includes regular inspections and maintenance of the heat delivery system to prevent breakdowns.
Costs and waiting times: what does the law say?
When a heat connection is requested, for example, when moving to a new office space or living quarters, significant costs and waiting times can occur. The supplier must realize a connection within a reasonable time, but what constitutes a “reasonable time” is not specified. Waiting times for connections are thus not defined in law, which can cause uncertainty in some situations.
Legal and regulatory aspects
The Authority Consumer & Market (ACM) monitors compliance with the Heat Act and can intervene if a heat supplier fails to comply. The ACM can impose fines or a binding line of conduct in case of violations. The ACM can also impose an order under penalty payments in case of non-compliance. For severe or repeated violations, an administrative fine of up to €900,000 or 1% of turnover can be imposed. The minister can revoke a license if the holder fails to comply with license conditions or statutory regulations.
The Heat Act, the Heat Decree, and the Heat Regulation offer consumer protection in several areas, from regulated tariffs to compensation in case of breakdowns. The ACM supervises the users and gives them the option to go to an independent disputes committee.
Your legal options: how Law & More can help you – “Tackle Heat Networks” action
Law & More B.V. understands the issues surrounding heat networks like no other. We have also had to deal with this at our offices. To support you, for November and December 2024, we are offering a 25% discount on the fixed hourly rate for consumer energy law cases of €250, excluding VAT. This promotion, called Tackle the Heat Networks, aims to help consumers protect their rights and force heat suppliers to provide fair and customer-friendly service.
At Law & More, we offer legal support on all aspects of heat networks and the Heat Act. Our experienced team can help you with:
- Understanding and disputing terms,
- Addressing failures and compensatory arrangements,
- Disputes with suppliers over security of supply and disconnections,
- Assisting with legal action in cases of wrongdoing or complaints to the ACM.
Having problems with your heat supplier or dissatisfied with the way you are being treated? Law & More will not leave you out in the cold. Then contact us for legal help.