Energy customers ‘to save £45 a year’ as Ofgem caps how much firms can pay shareholders
Ofgem says it wants to set a 4 per cent limit on how much energy network firms pay to their shareholders - 50 per cent lower than the current limit
HOUSEHOLDS could see their energy bills fall by £45 a year as Ofgem has put forward plans to "re-wire" Britain's energy system.
The regulator says it wants to set a 4 per cent limit on how much energy network firms pay to their shareholders.
That's 50 per cent lower than the 7 per cent to 8 per cent current limit.
Ofgem has also proposed lowering the cost companies face to borrow so that "consumers continue to benefit from the fall in interest rates since the financial crisis".
These combined measures will reduce how much firms have to pay, which in turn should see lower costs passed on to customers.
Ofgem reckons this will save consumers a combined £6.5billion - or £45 each - when its next price controls take force from 2021 onwards.
Alongside these network price controls, Ofgem says it will press ahead with plans to deliver a "smarter, fairer and cleaner energy system which is fit for the future and saves consumers money".
This includes introducing incentives for drivers to charge electric vehicles outside peak times.
Jonathan Brearley, executive director for systems and networks, said: "Our proposals for the new network price controls and charging reforms will help build a lower-cost, fairer energy system which is fit for this smarter, cleaner future.
"We want to cut the cost to consumers for accommodating electric vehicles, renewables and electricity storage, and make sure that all consumers benefit from these technologies.
"This will mean driving a harder bargain with network companies to ensure that households who need it always have access to safe and secure energy at a fair price."
How to switch suppliers and save £300
SWITCHING suppliers is the best way you can cut your energy bills. But recent research from MoneySuperMarket found that households are throwing away up to £300 a year by not bothering. Here's what you need to do.
1. Shop around - If you're on an expensive Standard Variable Tariff (SVT) deal you are throwing away up to £300 a year. Use a comparison site to see the best deals available to you.
The cheapest tariffs are usually found online and are fixed deals.
2. Switch - When you've found a good deal, all you have to do is contact the new supplier.
It helps to have the following information to hand - which you can find on your bill - to give to the new supplier:
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
For more advice read our guide on how to switch.
But National Grid says Ofgem's costings do not reflect the risk taken energy networks.
"In order to deliver the major capital programme required across our networks in a rapidly changing energy market, we need to ensure the regulatory framework also provides for fair returns to shareholders and enables us to continue to deliver world-class networks for consumers," National Grid said.
Mark Todd, co-founder at comparison site Energyhelpline said: "It’s long been suspected that efficiencies were possible with the super profits at National Grid into the billions a year a clear red flag.
"The cost of getting gas and electricity to consumers’ homes is around a quarter of the bill. It’s second only to wholesale costs, so taking action on this area of the bill can make a massive difference."
More on energy bills
New research has revealed that consumers are paying a "£782 loyalty tax" for sticking with their phone and Big Six energy providers.
But as the weather gets colder, thousands could miss out on £25 towards their winter electricity bills due to where they live.
Plus, eight bad home habits that push up your energy bills revealed - and how to beat them.
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