The Competition and Markets Authority says heat networks should be regulated, echoing calls from industry.
The watchdog is investigating the heat network market and its view is provisional.
The CMA outlined concerns over corner cutting, transparency, competition and costs to consumers.
Ofgem currently regulates gas and electricity, but not heat. As such, customers on heat networks have little or no protection. While developers and heat network operators on one hand can set their own rules, they also face higher cost of capital versus other utility infrastructure owners and operators.
Creating a heat regulator, whether Ofgem or another body, would require primary legislation.
The CMA is consulting on its preliminary findings. See them here.