Hot Off the Press: Ofgem Turns Up the Heat on Fair Pricing, Keeps Cool on Consumer Protection, and Stokes Financial Resilience (January 2026 Update)

Ofgem has released updated guidance (13 January 2026) on the regulatory framework that will apply when the Heat Networks (Market Framework) Regulations 2025 come fully into force on 27 January 2026. The new materials build on the September 2025 drafts and provide further clarity for operators and suppliers preparing for authorisation, ongoing compliance, and consumer‑facing obligations.

The latest updates do not alter the overall direction of travel but do strengthen expectations in several key areas, particularly consumer protection, financial resilience and the operation of the fair‑pricing framework. Below, we summarise the main updates relevant to heat network developer, owners, operators and suppliers.

Fair Pricing and Cost Allocation

Ofgem has made only limited amendments to the fair‑pricing framework since the September 2025 draft, but the new guidance contains some notable developments.

The guidance now explicitly acknowledges sector growth as an intended outcome of the fair‑pricing regime. The earlier “Affordability” principle has been renamed “Consumer Impact”, although its substantive purpose (to ensure charges and pricing structures consider the effect on end users) remains broadly consistent with the September draft.

While the overarching framework remains unchanged, operators should re‑review the internal fair‑pricing methodologies to ensure alignment with the clarified language and expanded outcome set.

Consumer Protection

Ofgem’s new materials significantly expand on the consumer‑protection guidance, with a strong emphasis on practical implementation rather than high‑level principles. Operators and suppliers now have access to detailed examples illustrating compliance with Standards of Conduct, contract transparency obligations, billing requirements, and more. These examples are intended to support operational teams and reduce ambiguity around day‑to‑day compliance.

The guidance provides a clearer distinction of roles and responsibilities e.g. in relation to the provision and sharing of customer information. It clarifies what data must be exchanged and when, enabling the supply chain to coordinate effectively on consumer‑facing obligations.

Ofgem’s tone has shifted noticeably. The guidance highlights that merely satisfying authorisation conditions may not always suffice. Instead, operators and suppliers are encouraged to adopt best practice, particularly where vulnerabilities, billing accuracy or service‑quality risks are present.

Operators should ensure that staff are trained not only on minimum compliance but also on the higher standards set out as best practice. To that end, they should also review their contracts and operational arrangements to ensure that the obligations to collect and share data are imposed on the correct parties, and then properly flowed through the contractual arrangements.

Financial Resilience

The most substantive changes coming out of this update are in the financial‑resilience section, expanding significantly on the earlier consultation draft.

Ofgem now provides structured guidance on the core conditions relating to: Availability of Resources; Operational Arrangements and Material Assets; and Continuity Arrangements. This gives operators more clarity as to what Ofgem will consider sufficient for authorisation and ongoing supervision.

The updated guidance also introduces explicit reporting templates and data‑submission requirements. Operators will need to prepare internal systems accordingly to ensure data accuracy and timely reporting.

Ofgem has provided practical guidance on the Special Administration Regime (“SAR”), outlining the steps that may be taken if a heat network becomes financially or operationally unsustainable. This includes Ofgem’s expectations for early warning indicators, contingency planning, and communication with consumers and creditors. This is intended to mitigate the risk of service disruption and reinforces Ofgem’s broader focus on continuity of supply and consumer protection.

Next Steps for Operators and Suppliers

With the Regulations coming into force in a matter of days, operators should now:

• Review the updated guidance in detail, particularly the expanded sections on consumer protection and financial resilience.
• Assess internal procedures against the fair‑pricing and financial‑monitoring expectations, updating documentation where required.
• Implement training programmes for operational and customer‑facing teams to reflect new practical examples and best‑practice guidance.
• Prepare for ongoing reporting, including the new financial‑monitoring templates and associated data requirements.
• Review contracts, making sure that:
  • the data collecting and reporting obligations flow through;
  • change in law clauses and variation clauses are exercised where equipment (e.g. metering) needs to meet the new standard.

If you require support navigating the updated guidance, reviewing compliance measures, or preparing for authorisation, please contact the authors of this article or your usual Clyde & Co contact.