Energy bills will drop after watchdogs vowed to cut profits of network firms in victory for The Sun
As part of our People Power campaign to cut bills, we highlighted the gas and electricity distribution operators make a combined £7.5billion a year in profit
FAMILIES will see lower energy bills after regulators said they would press ahead with plans to cut the profits of the firms that run the pipes and wires - in a victory for The Sun.
We highlighted in December how the network firms - who have the monopoly on the on getting gas and electricity to your home - make a combined £7.5billion a year in profit and pay fat cat bosses up to £6million a year.
Around £290 a typical bill goes to these firms - with around £96 pure profit. MPs and watchdogs demanded action.
Energy regulator Ofgem outlined in March new proposals that would limit how much network operators can pay shareholders.
The firms since then have been lobbying to be allowed to make more money but Ofgem yesterday said it was holding firm.
Ofgem said that the UK’s gas and electricity networks face a “tougher approach” that would deliver savings of more than £5 billion to consumers over five years.
The network firms are different to the likes of British Gas and E.ON who directly sell gas and electricity to families.
Under its plans, the amount network companies pay their shareholders would be set at between 3 per cent and 5 per cent from 2021.
Some of the companies affected include Cadent, National Grid, SSE and Scottish Power.
Describing it as the “lowest rate ever proposed” for energy network price controls in Britain, Ofgem said it will result in lower returns for energy network companies and significant savings for consumers.
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It estimates this would result in savings of about £15 to £25 per year on the dual fuel for consumers who pay for the network through their energy bills.
There are seven companies who get electricity to homes and four companies doing gas.
Each of the network firms has sole rights for the region they cover - meaning they have no competition and no reason to keep prices down.
They do not charge families directly. Instead, they bill energy firms, such as British Gas or EDF, or pass the cost on.
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