HOUSEHOLDS are overpaying for their electricity following Ofgem-set price controls that have resulted in excess profits for distribution companies, a charity has warned.
Citizens Advice said UK households are “footing the bill for billions of pounds in excess profits” made by electricity distribution companies – the firms that own and operate the system of cables and towers that bring electricity from the national transmission network into homes.
Last year the charity said that decisions by the regulator in the way it calculated price controls across the gas and electricity networks had cost consumers a total of £7.5 billion, or an average of £285 per household over the eight-year price control.
According to Citizens Advice, electricity networks alone are set to make excess profits averaging £75 per household across the eight years in even the least affected regions.
It has calculated that households in Northern Scotland should be given £110 back.
It is calling on networks to return the money to their customers.
The charity is also calling on Ofgem to ensure that its next set of price controls deliver a better deal for consumers.
Citizens Advice chief executive Gillian Guy said: “People across the country are overpaying on their energy bills because some network companies are making unjustified profits.
“Ofgem has signalled its intention to deliver a tougher settlement on the network companies and a better deal for consumers.
“The regulator will undoubtedly face strong and sustained opposition as the networks try to protect the status quo.
“Ofgem must hold its nerve and make sure that the next price control delivers much better value for consumers.
“But rather than wait for the next price control to be in place, firms which haven’t already should return these unjustified profits to consumers as a matter of priority.”
An Energy Networks Association (ENA) spokesman said: “The calculations underpinning this analysis are plucked out of thin air and run directly counter to the conclusions of the independent regulator and the Competition and Markets Authority.
“Network costs are down 17 per cent under the current ownership model, delivering £9 billion of savings for consumers by running a world-class system of energy networks more efficiently.”
An Ofgem spokesman said: “We have already set out proposals to address the issues Citizens Advice raise by setting tougher price controls for networks from 2021, with lower expected returns for the companies.
“Our proposals could save consumers more than £5 billion.
“We want to work with Citizens Advice and other key stakeholders to deliver the next price control.
“We are closely monitoring the performance of all network companies and we will keep up the pressure on them to get the best possible deal for consumers in the current price control.
“Our regulation and voluntary contributions by gas distribution and energy transmission companies has already secured around £5 billion in savings for consumers since the current price controls began in 2013.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here