This article explores the significance of modernization policies concerning Russia’s technically obsolete but socially important residential heating sector, focusing on the 2009 energy efficiency framework law and its prospects for implementation. Ownership and control structures are in flux throughout the heating sector chain. Inefficiencies, causing low service quality and rising prices, have already started eroding the market share of district heating, despite its potential benefits. End-use management practices – such as lack of metering, communal billing, and low prices that do not cover production costs – reduce consumer incentives to cut consumption. The diversity of end-users adds to the complexity of focused measures like energy-saving contracts. However, end-use sector reforms such as mandatory meter installation and increasing prices – even if socially acceptable and fully implemented – cannot alone provide the massive investments required. More appropriate is sector-wide reform with the government’s financial participation – especially if consumer efforts can yield better service quality.