Ofgem Limits Electricity Prices Rises for Next 5 Years
Ofgem and the 7 main electricity suppliers in the UK have reached agreement that on average UK electricity prices will be limited on rising by just £4,30 per household per year for the next 5 years.
The agreement announced in January 2010 is for the 7 owners of the UK’s electricity distribution network that control 14 regional networks that transport electricity from the national grid directly into domestic houses and business properties.
As part of this agreement these companies will be able to invest up to £7.2 billion to upgrade their existing networks which also includes a £500 million fund to trial smart grids as required in a low carbon economy.
The price controls which have been in consultation for many months set out the maximum amount of revenues that the energy companies can earn from their customers. These are now set until 2015. Some companies including EDF were debating on whether to refer these price controls that Ofgem wanted to implement to the competition commission but at the end of the day now all energy companies have accepted the proposals.
The price controls affect around 20% of an energy bill for electricity and the energy companies were initially concerned that they could not make enough profits whilst investing in upgrading their networks and undertake tests on smart grids.
This was the fifth electricity price review code names DPCR5 for EDF Vincent de Rivaz their Chief Executive said:
“Our comprehensive and detailed analysis of Ofgem’s Final Proposals has been carried out with a clear vision for the future of this business to meet the needs of all its stakeholders. In a nutshell, this package will be challenging but this business is ready to rise to this opportunity. ”
“This package provides some real opportunities for EDF Energy and its networks employees to build on their success over the last five years. We look forward to engaging with all our stakeholders to meet our business objectives as we set out on the next five years of this journey.”
“EDF Energy has delivered £2.1bn of capital expenditure since 2005. In doing so, we have already led the way in demonstrating the need for increased investment, a path which the other operators are now following for the DPCR5 period. Now we also intend to lead the way with our programme of further efficiency improvements and even higher levels of customer service. ”