Ofgem Restrain Electricity Price Rises

Christmas festive lights adorn a detached house in a suburban Melksham, England, in daylight, December 6, 2009. A display of over 115,000 bulbs estimated to be worth over £30,000. (Matt Cardy/Getty Images)

LONDON—The energy regulator is stopping electricity suppliers from putting grid improvement costs onto customers’ bills over the next five years, an Ofgem statement said on Monday.

Ofgem (Office of the Gas and Electricity Markets) estimated in 2008 that mandatory green improvements added approximately £80 onto annual gas and electricity bills.

Electricity bills may go up by an average of £4.30 a year from April 1st, 2010.

Companies will be allowed to raise £500 million collectively to pave the way for large-scale trials of “smart grids”, which use special meters and other technology to reduce carbon emissions.

The 14 previously state-owned, low voltage, distribution networks take electricity from the national grid and pass it to homes and business customers. The networks are owned by seven separate firms: CE Electric, Central Networks, EDF Energy Networks, Electricity North West, SP Energy Networks, SSE Power Distribution and Western Power Distribution.

Distribution costs are regulated by Ofgem as the networks are natural monopolies and are not subject to competition.

They have until January 6th to accept Ofgem’s proposals, then new price controls will be introduced on April 1st, 2010, running until March 31st, 2015.