Electricity suppliers to raise prices

Monday, 03 August 2009 12:00

Energy watchdog Ofgem has demanded suppliers cut their costs to keep electricity bills low.

The regulator has agreed vital upgrades on electricity networks must be made, but said the improvements must cost 17 per cent less than each firm forecast, to protect customers from prices rises.

The companies distribute electricity from the national grid to homes and businesses, and Ofgem can regulate the revenues that they collect.

Ofgem chief executive, Alistair Buchanan, said: “We have accepted the
Companies’ investment plans but told them to deliver them at much lower cost.”

The investments in networks that were largely built in the 1950s and 1960s will add will add less than £4 a year, on average, to annual domestic electricity bills, according to Ofgem.

Ofgem has accepted a £6.5 billion investment programme for the networks for 2010 to 2015, 17 per cent less than the figure the firms demanded.

In return for higher prices, the regulator has demanded better service for customers.

The companies will earn additional rewards for outstanding customer service but face penalties for poor service and will have to pay compensation unless they “significantly improve” their existing connections service.

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