The watchdog said that as district heating is not regulated in Scotland, consumers do not benefit from the same level of consumer protection as those who use gas or electricity to heat their homes. While the district heating market is currently small, it is expected that it will expand significantly in coming years.

A report from the watchdog, Different Rules for Different Fuels found that:

• There is a clear need for greater consumer protection measures for district heat consumers in Scotland.
• The Scottish Government could introduce statutory consumer protection measures through a licence for the supply of district heat. These include measures around billing, metering, standards of service, access to redress and pricing.
• There was wide support – from both suppliers and other stakeholders – for greater consumer protection measures, including regulation.

The report recommends that the Scottish Government consider:

• Establishing a Scotland-wide body with responsibility for the regulation of the district heating market.
• Providing support for suppliers to ensure they are able to meet regulatory standards and consumer expectations.
• Investigating what mechanisms are available to introduce price controls for district heating systems.
• Introducing a statutory licence for district heating suppliers. This should include compulsory consumer protection measures as well as minimum technical standards to ensure efficient operation.