Households could save £5 billion - or about £15 to £25 per year for dual fuel customers – under proposals outlined by the energy regulator.
Ofgem has set out plans for a new regulatory framework from 2021, which will see consumers pay less in network costs. As of March 2018, network costs account for around £250 of a typical annual dual fuel bill of around £1,100.
But Ofgem says its plans are expected to result in “significant savings for consumers”.
Jonathan Brearley, Ofgem’s senior partner for networks, comments: “The energy sector is rapidly changing and consumers must be confident they continue to get good value for money for the services the networks deliver.
“Ofgem’s stable regulatory regime allows companies to attract investment from around the world on behalf of consumers in Great Britain at the lowest cost. We will capitalise on this by getting network companies to work harder to deliver better value for consumers in the next price controls. This will mean lower costs for consumers of £15 - £25 per year on bills and lower returns for companies.”
Gillian Guy, chief executive of charity Citizens Advice, adds:
“Today’s announcement is a major step forward. These proposals should prevent a repeat of the billions in excess profits energy network companies are making under the current price controls. This means better value for consumers and potentially lower bills."
A consultation on the proposals closes on 2 May with Ofgem’s final view to be published by the end of 2020 following companies submitting new business plans.
See Moneywise’s Energy section for more of the latest news and money saving advice.