Ofgem unveils plan for cheaper, cleaner electricity

Ofgem has called on UK electricity distribution companies to provide consumers with cheaper and cleaner electricity at no additional cost.

He laid out a five-year plan to increase investment in domestic supplies and make electricity cheaper, while helping the UK “no longer be at the mercy of international energy prices or geopolitical events.”

The plan, due to begin in April and run through 2028, sees the six companies channel their investments into “more domestic, cleaner, cheaper and safer energy sources.”

The total allowable spending for the six companies was around £22bn, Ofgem said, adding that the proposal is expected to increase the use of renewable energy sources, including wind and solar, combined with extensive nuclear and hydrogen power.

Akshay Kaul, Ofgem’s acting director of infrastructure and security for the supply group, said it would create “consumer value” and ensure supply security.

“We have identified initial investments that local electricity distribution system operators can make between 2023 and 2028, when every pound represents good value for consumers, not an increase in bills,” said Mr Kaul.

“The energy industry has changed as cleaner domestic renewables such as wind and solar power have proven to be cheaper than expensive imported gas. Along with more nuclear power and possibly hydrogen propulsion, these renewables will contribute to a low-carbon energy mix that is better insulated from geopolitical events and energy price spikes.”

Businesses need to recoup their investment costs by including network costs in consumer bills, while also capping network profits and improving efficiency. Ofgem claims that this investment can be made without increasing bills, which will still average £100 per year per payer.

The regulator, which has faced widespread criticism for its failure to regulate the electricity market, said the plan is subject to approval by distribution system operators UK Power Networks, Northern Power Grid, SP Energy Networks, SSE Power Distribution, Electricity North West and National. Distribution of electricity through the network.

Critics accused the regulator of “easily letting down” energy companies.

Unite, the UK’s leading trade union, has criticized the regulator’s failure to curb rampant speculation by utilities like UK Power Networks.

Sharon Graham, General Secretary of Unite, said: “Ofgem has completely failed to protect the public from predatory energy speculators. This price review will allow distributors like UK Power Networks to pay out of pocket as we will overpay them all at least £1.5bn over the next five years. This cannot go unanswered.”

She said the union would raise the issue with MPs in the hardest-hit areas “so they can’t ignore how energy speculators hurt their constituents, or the power of public opinion that keeps them in check.”

Gillian Cooper of Citizens Advice said the plan would offer consumers better value for money, but said grid companies’ profits would “still be too high and the targets too easy.”

“We think Ofgem can go even further and save at least another £1.5bn in billing. Networks have been making exorbitant profits for far too long. In the midst of a cost-of-living crisis, Ofgem rightly urges them to operate as efficiently as possible, which will help lower people’s bills.”

Vicki Kelsall of SP Energy Networks said: “During the development of our plan, the voices of our customers were clear: we must be bold as we transform our network, support the UK’s fast track to net zero, and a green recovery will create more quality. workplaces. This is what we stand for.

“We are delighted that Ofgem has recognized the strength of our plan by accepting 95% of the intended investment, and we will now look into the details to ensure it delivers results for the clients and communities we serve.”