The price of district heating surged quickly in the autumn of 2021, which has been felt in the wallets of many consumers. The Consumer ombudsman examined the increases made by Helen to the price of district heat and contract water flow. The total price of district heating should be allowed to increase by no more than 15% a year and changes in water flow must be announced well in advance.
The price of district heat is composed of the so-called water flow fee and the energy fee. In August 2021 Helen began to re-examine water flow to ensure that they are at the right level for all customers who are consumers of district heat. The price of energy, meanwhile, rose by nearly 30% both in the autumn of 2021 and in the winter period of 2022, owing to rising production costs . Helen is the district heating operator in the Helsinki area.
The mandate of the Consumer Ombudsman in alterations to district heating contracts is limited to consumer-customers. However, locations operating as companies, such as duplexes and row houses, fall outside of the Ombudsman’s mandate. It would nevertheless be justified for these to be covered by the same principles of consumer protection when changes are made to district heating contracts that apply to detached houses, for example. Another special feature of district heat is that no specific legislation has been passed on it.
Changes in water flow must be jointly agreed well in advance
The Consumer Ombudsman has noted that modifications to Helen’s water flow are significant changes for many consumers and the way that they have been implemented has been problematic. For some customers, the water flow has been too weak when consumption rises, and the changes have led to sudden price rises as high as 50%. The price of the water flow itself was not raised. Helen informed customers about the changes by letter a month before they took effect. When this happened, customers could not adequately prepare for the change by making necessary repairs or adjustments to their district heating equipment.
The general contract conditions for district heat set by Finnish Energy require that changes in contracted water flow must always be accompanied by a separate contract. However, Helen has removed the mention of this, saying that it had not been possible to write new contracts on changes to the water flow.
The Consumer ombudsman emphasised in the discussions that deviations from established conditions in the field cannot be made to the detriment of consumers by neglecting the requirements of consumer protection when contractual terms are altered. Changes in water flow cannot be implemented through unilateral announcements, and both sides must be involved in the changes.
The Consumer Ombudsman demanded that in the future, Helen must not make significant one-off increases to consumer water flows unilaterally. If necessary, the increases must be implemented in stages over a longer period. Future increases affecting contracted water flows must come only after customers have been given timely advance notice, explaining the background and reason for the change.
The Consumer Disputes Board decided on 7 February, 2022 on the pace at which the increases would still be reasonable. The board took into account that the checks on water flow were aimed more at balancing price and consumption, and not so much raising prices. The Board felt that primarily, an increase that raises the water flow fee together with an additional connection fee by no more than 30% at an annual level is still reasonable. The hike may exceed 30% if the effect of the change falls below €300 a year.
Moderation needed when raising energy prices
Helen raised the energy price of district heating for the 2021 autumn period by 29.9% from the previous year’s level. The company enacted an equivalent price rise for the winter, taking effect on 1 January 2022.
In its pricing, Helen uses four price periods in which the change does not directly reflect the size of the price difference on an annual level. When assessing the overall impact of price increases, we also need to consider that in addition to the energy fee, district heating also incurs the water flow fee, which can account for as much as 40% of the district heating bill.
In the discussions, the Consumer Ombudsman referred to the Consumer Disputes Board’s earlier practice in price hikes in water supply and transmission of electricity which could also be applied to the pricing of district heating. The board has taken the view that prices can be increased by no more than 15% a year. If the change in a year is less than €150, the percentage of growth may be higher. Helen also announced that it aims to keep the overall annual change in district heat at less than 15%.