UK electricity bills to fall by £12 a year, Ofgem says

Bills are to be reduced by £12 a year on average after new price controls were agreed by five of the six companies that run Britain's electricity network.

Ofgem said the cut had been driven by £2.1bn of savings it had secured from the companies' business plans since last year. The regulator's proposals will see the distribution companies spend £17bn to upgrade and maintain Britain's local electricity network.

At the same time, the distribution 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 between April 2015 and 2023.

Last November, Western Power Distribution was the only company to have its prices agreed early after Ofgem judged that its business plan for the eight-year period showed sufficient value for consumers.

Ofgem 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 value for consumers.

Since then, companies have identified £700m of savings and Ofgem has earmarked a further £1.4bn following further analysis.

SSE said it was disappointed with a number of elements within the draft determination, including Ofgem's assumptions about the scope of further cost reductions across the industry.

It said it was already one of the most cost-efficient operators in Britain and said it would review Ofgem's assumptions on how it will be able to operate and develop its distribution networks for customers benefit.

Source: The Guardian (UK.)