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Ofgem Promise Price Control Brings Savings

In November the Ofgem Supply Market Indicator (SMI) revealed that network costs make up 23% of the retail price of energy.

In quick succession Ofgem has finally announced its annual price control for the distributors of electricity around the UK networks. The ‘wires’ owners were made aware of Ofgem’s broad intentions in July when tougher than expected cost controls were announced.

That followed 5 of the UKs 6 distribution networks having their initial price control proposals rejected after Ofgem judged that they “failed to deliver good enough value for customers”.

Now Ofgem, in their final ruling, have claimed their new price control will slash customer bills by £2.1bn

The five companies affected by the price plans were SSE Power Distribution, Electricity Northwest, Northern Powergrid, UK Power Networks and SP Energy Networks. The sixth, Western Power Distribution, had earlier committed to their price control.

It will be of interest to see November 2015’s SMI to see whether this latest price control really has had an impact on the retail cost of energy. What is good to see however is a reversal of some of the largesse allowed by Ofgem under previous price control periods.