How Ofgem wants to cut energy bills by £12

In the energy regulator's ongoing quest to look like it's in control, it has persuaded energy distributors to fork out £17bn to upgrade the UK's electricity networks.

by Emma Haslett
Last Updated: 14 Nov 2014

A slightly odd announcement from Ofgem this morning: the energy watchdog said it can reduce average bills by £12 on average from April 2015, while at the same time making energy distribution companies (like UK Power Networks, SP Energy Networkd etc) spend £17bn on improving energy infrastructure, under new spending plans approved this morning.

As anyone with ears will tell you, over the past year or so there's been a bit of a to-do over competition in the energy market. As bills have risen, so have dividends from energy companies - and then there was the slightly embarrassing situation where the government scrapped green taxes on energy companies, and bills went up anyway...

So this news makes Ofgem look a bit more in control of the market: apparently the £17bn spending plan is actually just over £2bn lower than companies spent this year, meaning the average annual dual-fuel bill of £111 should drop by 8% to £99.

Of course, these measures aren't specifically aimed at the energy companies themselves - rather, they apply to the firms running the bit between power stations and homes. But chances are they will put more pressure on the Big Six, which (despite falling wholesale energy prices and heavy criticism from just about everyone) have so far refused to cut bills.

The only problem is that at the moment, energy infrastructure in the UK is so diabolical, Ofgem has suggested the UK might soon be hit with winter of discontent-style blackouts. Mainly, that's to do with a lack of decent power stations - but the grid itself isn't in a great state, either. So cutting spending on infrastructure right now seems ill-advised....

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