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Households could see their energy bills cut by £20 a year under proposals from the energy regulator Ofgem.
Ofgem has unveiled proposals for a five-year investment programme of around £25 billion to transform Britain’s energy networks to deliver emissions-free green energy for the UK. Investment in the networks that transport energy around the UK is likely to rise, to ensure they can deliver clean energy and meet Government targets for a net zero emissions.
Ofgem’s proposals as they stand would lead to an expected £20 fall in network charges on bills per household a year at the start of RIIO-2. This would help offset the increase in investment and charges expected later in the price control.
Jonathan Brearley, Ofgem’s Chief Executive, said “Ofgem is working to deliver a greener, fairer energy system for consumers. This is why we are striking a fair deal for consumers, cutting returns to the network companies to an unprecedented low level while making room for around £25 billion of investment needed to drive a clean, green and resilient recovery.”
“Now more than ever, we need to make sure that every pound on consumers’ bills goes further. Less of your money will go towards company shareholders, and more into improving the network to power the economy and to fight climate change.”
“Ofgem’s stable and predictable regulatory regime will continue to attract the investment Britain needs to go further and faster on decarbonisation.”
Commenting on the announcement, Dame Gillian Guy, Chief Executive of Citizens Advice, said “Today’s announcement is another step closer to a price control that stops network companies from overcharging energy customers by billions of pounds.”
“These decisions are extremely technical, but they matter. Ofgem has struck the right balance between shareholder returns and value for money for energy customers, while making sure networks can continue to attract investment.”
“Energy networks are key to meeting net zero, but future demands on the energy system are hard to predict. Decarbonising heat, electric vehicles and increased use of smart products in the home will pose different challenges. But measures outlined today should potect consumers by ensuring the transition to net zero is done at a lower cost.”
Peter Earl, head of energy at comparethemarket.com, said “The British public is increasingly receptive to going green with their energy, and suppliers have responded by making a greater number of renewable tariffs available. However, investment in the technology to decarbonise energy used for heating – to replace gas – has been lacking. ”
“This programme, if properly implemented, should help to drive innovation in the sector and work towards delivering renewable energy for everyone in Britain. Going green should be a win-win for households looking to save money on their energy tariff and reduce their carbon footprint, but whilst ambition is necessary to meet the government’s net zero targets, it is important that the regulator keeps a close eye on whether such huge monetary investment negatively impacts household energy bills.”