Project Business Case
Yes, the tariff will contribute to the costs of replacing major equipment as and when required. These costs have been provided for within the project business case to ensure that our customers will always receive a high quality of service.
The grant funding received from the Heat Network Investment Project (HNIP) will fund around 25% of the total £7m cost of the heat network. The remaining 75% (around £5.2m) will be funded by the County Council via a low-interest Public Works Loan Board loan, available for local government investments. The business model has been approved by the County Council and the full business case is available for view online: https://tinyurl.com/y8yvvhgo
There will be administrative costs of billing and managing properties and maintenance. However these will be for the Council to manage and costs will be for the Council. Your Charges will be based on the tariffs and charges set out in the Heat Supply Agreement - as set out these are capped fees by reference to an independent comparator.
The Council has no intention of selling off the Scheme however were the Council to do this your contract would be with the new heat supplier who would be bound by the heat supply agreements. However the Council has heard the significant concern of local people about selling off the Scheme and will consider this further following the consultation.
If I sign up to the contract, there is no market competition available to consumers. How is pricing kept competitive?
The heat tariff will be benchmarked against the cost of an oil-fired heating system using a cost comparator. We are proposing to carry out this exercise every 5 years to ensure that our prices remain competitive and do not result in customers paying more for their heat and hot water than they would be if using oil. Should an oil-fired heating system cease to be the most appropriate alternative to the District Heating Network then the cost comparator may be reviewed and any alternative heating options will be considered.
Regarding Paragraph 14.4, if the whole system fails permanently, what would protect us from having to pay for years thereafter for nothing? Would we just lose the £2000 end of contract fee perhaps?
The Council considers the prospect of whole system failure to be highly remote. However you have the right to terminate the Contract at all times - see clause 23.2. Further where you do so for our fault (which in the event of permenant failure of the system would be the case) no Cancellation Charge would be payable and no future charges would also be payable. We note this point and will clarify this but the Council has no intention of leaving any customers trapped paying for a failed heating system.
The Community Land Trust and (potentially) the Swaffham Prior Parish Council will enter in to an agreement with Cambridgeshire County Council with collaboration on key areas of the Scheme. This document is still being discussed and the level of collaboration will be made avialable. The Council wants active community engagement in this process.
The Council will provide phone and email options to report faults. A website option will also be considered.
Customer Contract (Heat Supply Agreement)
You are correct this is unusual. The reason for this is that the heat network is new and the phsycial connection to your home needed to be constructed. Typically in most homes this would exist already (by way of example you might have a gas supply and the connection would already exist and have been installed by the developer). This is not the case here as the heat network is a new build network so we have had to incoporate the actual construction of the connection in to the contract to ensure adequate protections and provisions exist to cover us building the connection at your home.
No. The Council is responsible for all of its equipment and for delivering a heat supply to your home. Like any other supplier the Council could not be responsible for the equipment in your property or indeed your actions. The terms of the contract are based on best industry practice and compliant with consumer rights and Heat Trust standards. By way of example the Appendix 7 about events that are your fault and your responsibility is actually based on BEIS standard templates for heat supply agreements - which you can see here. We consider we have complied with best industry practice in respect of the Heat Supply Agreement but can of course answer any questions about specific risks.
This agreement is based on best practice for heat supply agreements and has adopted Heat Trust Standards. The Council has also been guided by BEIS example agreements which can be found here. A key difference is the provisions for works. Because this scheme is a retrofit scheme we actually have to build the connection to your home as well and the contract deals with this. A further difference is the Cancellation Charge should you wish to leave. Most tenants in blocks with district heating have no practical choice and have to remain with the district heating provider - effectively customers are "locked in". The Council did not want to do that but the Council has made a significant and areas specific investment to unlock this opportunity in Swaffham Prior. The Council wants customers to be able to leave if they wish but does need to recover some small level of costs invested where it does so. This protects the Council and other local people who have signed up.
Final details will be resolved post consultation but we have tried to provide all details needed for meaningful consultation. We would be happy to answer questions about any outstanding areas and the current direction of travel. Some areas necessarily need to be finalised once the final technical details of the scheme are sorted.
Customers could be exposed to a loss of heating and the need to replace their heating systems. The Council considers this risk is very remote and unlikely to arise.
This agreement is based on best practice for heat supply agreements and has adopted Heat Trust Standards. The Council has also been guided by BEIS example agreements which can be found here https://tp-heatnetworks.org/heat-contract-templates/.The agreement has been reviewed by experts through the grant applications submitted to BEIS and internally at Cambridgeshire County Council.
Swaffham Prior Community Land Trust are currently requesting quotes for an indpendent review of the HSA, to review the contract on behalf of residents.
Listed Building Consent Order is required to carry out works required for the removal and installation of equipment in any listed homes. The relevant permissions will be sought be the Council on behalf of the property owner so that these works can be carried out. (See section 3.1 in the HSA, page 21)
Yes, you can sign-up to the scheme at a later date, you will however have to pay a connection fee (TBC).
The Council has waived the connection fee for households that sign-up in November 2020, to encourage households not to hold back and achieve the minimum numers required to secure the project as a whole.
You should also be aware that without sufficient demand the Council may not get sign off to proceed with the Scheme.
Installation and Connection
The connection charge is waived for households that sign the Heat Supply Agreement in November 2020.
The connection charge includes:
Removal of oil tank
Removal of oil boiler
Installation of pipes connecting to network
Installation of Heat Interface Unit (HIU) and heat meter
Yes, the removal of the boiler and oil tank is included within the connection costs, which are waived for those who sign up to the scheme in November 2020. The contract does not list equipment to be removed from households, as this will need to be evaluated on a household to household basis, and specifics confirmed with individual owners. Appendix 1 sets out the process by which these works will be agreed.
The works required to install and connect your home can only be carried out if you agree to what is proposed, so contractors will be required to work with you to make sure that it is agreeable. They will propose a location and discuss it with you. A formal process has been put in place within the Heat Supply Agreement (Appendix 1) to list the works required, the time frame for these to be delivered, and verify your consent for these to be carried out. (The HSA is available to view at www.heatingswaffhamprior.co.uk/HSA).
The Council is responsible for carrying out its works with reasonable skill and care. It is also responsible for any damage caused to your property. The Council would therefore expect to leave your property in the condition they found it post execution of its works.
In this context "make good any damage" means "any damage" - to use your example if the Council installs an asset and damages pipework in the ground the Council would be responsible for costs of digging back up the ground, repairing the damaged pipe and recovering the pipe.
You should contact the Council and let us know. Where we have not carried out work in accordance with the required standards set out in Appendix 1 - including reasonable skill and care and making good any damage - you would have legal rights against us. However in the first instance the COuncil would, where works had not been executed properly, require its contractor to rectify the problem.
The Council cannot give advice on your individual insurance policy. However people should generally notify their insurer as early as possible if they are doing any building work on their home. The Council will consider providing a statement that people can give to their insurers to assist those who may wish to sign up.
What if in removing an existing oil boiler / tank pre-existing faults of the heating system are identified. (1) Would these faults be repaired (2) Would any damage that occurs as a result of these faults be repaired?
This is a helpful question. Where the Council causes damage we will be liable for it and pay to repair it. We will not fix any pre-existing faults with your home. A worked example may help - where the Council removes a pre-existing oil tank if the Council's work is negligent and the result is that we damage your property that would be the COuncil's responsibility and we would have to pay for that. However, if when the Council removed the oil tank there was pre-existing environmental/contamination issues e.g. the bottom of your tank had spilled as a result of long-term damage not caused by the Council then the Council would not be responsible for this.
We are proposing to set the standing charge at £300 per year, or £25 per month. We have based the standing charge on the following costs of owning and maintaining an oil boiler:
- Replacement of an average sized 20kW oil boiler at the end of its 15 year useful life (one fifteenth of the cost would be paid for each year instead of one lump sum)
- An annual boiler service to keep the boiler in good working order
- Three hours of callout charges for a plumber incurred over a 5 year period
The variable charge, which is based on the amount of heat and hot water you use, will be indexed in line with changes in the average cost of electricity. Oil prices are expected to increase at a faster rate than electricty prices over time, we believe that this represents good value for our customers. We are proposing to index the standing charge in line with RPI as this charge contributes to the Council's costs of operating and maintaining the heat network, which we would expect to increase in line with RPI.
Meter readings will be taken monthly. We hope to be able to do this remotely.
We are finalising the working tempratures as part of final design. However page 28 of the Heat Supply Agreement sets out the minimum standard of heat supply to be delivered by the system. The intention is that the minimum temperature of Heat Supply at the Heat Exchange Point in the peak of winter will be not less than 72 degrees Celsius and a minimum of 62 degrees in the peak of Summer.
There will be some variation in the Heat Interface Units to be supplied to each home. Whilst most HIUs are a similar unit size, they vary in kWh output, as a boiler does, so smaller and larger or older homes will have a different capacity HIU installed.
Yes, there are combi-HIU models availabel for installation in homes and suitable for connection with existing heating systems of this sort.
Why is alternative heating not available all year round for vulnerable customers should the system fail?
Alternative heating supply will be provided for vulnerable customers in the event of Interruptions - see clause 5.5 of the Heat Supply Agreement.
How much notice will I be given to facilitate any maintenance of the Heat Interface Unit or other Council installations in my home?
The proposed timings set out in the Heat Supply Agreement represent what we consider to be industry best practice but we will consider any specific comments received.
Reference to intervals of "not less than once every 24 months" provide the minimum inspection time we would expect. We may exceed this standard.
Who is responsible for the interface between my internal heating system and the heat interface unit?
This will be defined by the definition of Heat Exchange Point and will be defined on a property by property basis. The HSA makes it clear that the Council will be responsible for its works and heat supply to the Heat Exchange Point. Please let us know if this answers the question.
There will be a performance payment sanction for this - see performance payment F at clause 9.6.
You can request that the Council inspect it - see clause 13 of the Heat Supply Agreement.
Leaving the district heating network…
This is a really good question as we acknowledge a Cancellation Charge is unusual.
The Council did not take the decisions to incorporate a Cancellation Charge lightly. It has also ensured the Cancellation Charge is limited in nature.
The Council will have made a significant investment in the scheme to make this project work - this will include building a connection to your home. The Council will make this investment relying on local people to use the Scheme. The Cancellation Charge is designed to recover some small amount of the Council's losses where people leave the Scheme. The Council will still have a significant risk where people leave the Scheme. Further the Scheme works best where a sufficient number of people in the village sign up to it and remain customers of the Scheme. .
The Council does not want to put anyone in a position where they are faced with a huge bill so they have capped the amount of of any Cancellation Charge at £2000. This amount reflects some of the areas specific investment that the Council have made, protects all other customers of the Scheme and is proportionate to what might be manageable. The Cancellation Charge will also reduce each year.
It is worth noting that in most other district heating schemes - such as a new build heating scheme in a tenanted block - tenants actually do not get a choice about their heating. This means they can find themselves "locked in" to a heating contract. The Council was absolutely determined not to do this. We want customers to be able to make a choice about their heating. However where customers do leave they do have to recognise that other customers on the scheme may be impacted and that the Council has invested significant amounts in the Scheme.
The Cancellation Charge is a key area where the COuncil would welcome feedback.
We anticipate that the average cost of connecting homes to the heat network will be in the region of £4-5,000 including pipework, labour, the heat interface unit and any modifications required to your property. For customers who join the heat network in November 2020, the Council will cover these costs in full. Should customers wish to leave the heat network, these costs would not be recoverable for the Council. We therefore feel that a day 1 cancellation charge of around 40-50% of the connection costs is fair, with the remaining costs representing losses to be absorbed by the Council. The cancellation charge will reduce to zero over the 40 year lifetime of the project as customers contribute towards covering the costs of delivering the scheme through the monthly charges for heating and hot water. The maximum cancellation charge will be £2,000.
What happens is actually quite normal for a utility supply i.e. if you own your home jointly then the living owner of the property will continue with the heat supply. Where the home passes in to the estate of the deceased person the estate will be responsible for all charges until the property is sold to a new owner. We thought it was helpful to spell this out for people explcitly as it is something that quite often surprises people when it happens.
If after joining the network, I decide that the heating system isn't working for me, am I able to leave the network?
You are entitled to leave the heating scheme on 90 days notice. If you leave the Scheme you may have to pay the Cancellation Charge.
Who is repsonsible for the security and maintenance of the system installed in my home, in any period between cancellation and contract with new owner?
For as long as you are the property owner you would be responsible for damage caused to the Council's property and placed on your property.
What if a Heat Supply Agreement is transferred to a new property owner, who then backs out of the house purchase?
The Heat Supply Agreement will be retained by the local resident until it is terminated. Where a Heat Supply Agreement is terminated but the new owner is entering in to a Heat Supply Agreement no cancellation charge will accrue.