Shake-Up Could Result in Lower Energy Bills, Says Regulator
- Ofgem has proposed changes that will leave households better off
- Would limit how much operators can pay shareholders
- Lower returns for energy companies and savings for customers
Households could be in line for a reduction in their energy bills, under new proposals from regulator Ofgem.
These would limit how much a network operator can pay shareholders, with the savings being passed down to you, the customer.
Ofgem said on Wednesday that the UK’s gas and electricity networks face a “tougher approach”, which would deliver savings of more than £5 billion to consumers over five years.
This comes after Ofgem and the government have worked together to crack down on energy companies, such as by limiting the period where they can back-bill, and introducing a price cap that could save families £300 a year.
Under the most recent plans, a new regulatory framework would be put in place, where the amount that a network company can pay its shareholders would be reduced to between 3-5%.
Some of the companies who would be affected by this are Cadent, National Grid, SSE, and Scottish Power.
The rules would allow companies to offer lower rates and have better energy price controls in Britain.
Ofgem said it would result in lower returns for energy network companies, and result in significant savings for customers.
Jonathan Brearey, senior partner for networks at Ofgem, said, “The energy sector is rapidly changing and consumer must be confident that they’re getting good value for money for the services the networks deliver.”
“Ofgem’s stable regulatory regime allows companies to attract investment from around the world on behalf of consumers in Britain at the lowest cost.
“We will capitalise on this by getting network companies to work harder to deliver better value for consumers in the next price controls.”
It estimated that it would save households £15 to £25 per year on the dual fuel for consumers who pay for the network through their energy bills.
Another way to save money on your energy bills is to switch network, last year households saved an average of £250 by looking for a better deal.
Ofgem’s other proposals for a new regulatory framework include changing to a default five year price control, instead of the current eight year period, and tougher requirements have more scrutiny on network companies’ business plans.