OFGEM has set out its proposed price control settlements for five of the six companies that run Britain’s local electricity network, which transports energy into homes and businesses.
The proposals would see the network companies spend £17bn to upgrade and maintain Britain’s local electricity network. At the same time, this part of the energy bill – which accounts for 8% of an annual dual fuel bill – will be on average £12 a year lower than it is today for the eight-year period of the control. These proposals are planned to come into effect in April 2015 and run until 2023.
Last November, Western Power Distribution was the only company to have its price control agreed early after we judged its business plan for the eight year period showed sufficient value for consumers. We returned five out of the six companies’ plans (UK Power Networks, Northern Power Grid, SP Energy Networks, SSE Power Distribution and Electricity North West) because they failed to deliver good enough value for consumers. Since then, £2.1bn has been cut from the plans, with companies identifying £700m of these savings and us disallowing a further £1.4bn following analysis and benchmarking of costs.
In addition to requiring efficient investment, OFGEM has challenged the companies to improve customer service and take a more active role in helping vulnerable customers. Companies have responded well and plan to improve the help to vulnerable customers for example during power cuts. The annual customer satisfaction survey focuses companies’ attention on this important area and poor performers will face financial penalties. We have also sharpened targets to help new customers, such as businesses, new renewable generation (including community plans) and housing developments, get connected to the network faster.
This announcement is all part of OFGEM’s consistent drive to get the best deal for consumers while maintaining a stable regulatory regime which attracts investment as cheaply as possible.
