Consumers have paid at least £800m more than was needed to maintain and improve Great Britain’s electricity network since 2013, according to a report from the National Audit Office (NAO).
The public finance watchdog said energy regulator Ofgem had not taken into account the most up-to-date evidence on network company risk and instead allowed businesses to deliver shareholder returns of 9%, instead of the UK average of between 5% and 6%.
The NAO also criticised the energy regulator for setting price controls for eight years instead of the standard five, which locked consumers into paying higher prices for longer.
Akshay Kaul, Ofgem’s Director of Network Price Controls, admitted: “We acknowledge that the overall costs to consumers to date have turned out to be higher than they needed to be. That’s why our tough new round of price controls will lower returns to save consumers money, whilst pushing companies to go further on decarbonisation and ensuring we retain one of the world’s most reliable energy systems.”
Gareth Davies, the head of the NAO, added: “While Ofgem has encouraged networks’ innovative efforts to reduce carbon emissions, more needs to be done across government if the UK is going to reach net zero emissions at least cost to consumers.”