Price controls could force energy firms to cut bills – but only by £25 a year
Millions of customers remain on poor value standard variable rates, which are £300 more expensive than the cheapest deals on the market
Britain's energy regulator has set out proposals for its "toughest" ever crackdown on energy network profits - but it will only cut household bills by £25 a year.
Ofgem's new price controls, which will come into force in 2021, aim to significantly reduce the profits energy network companies like National Grid, UK Power Networks and SSE receive.
It comes after campaigners criticised Ofgem, saying it allowed the firms to make an excess £7.5 billion in profit
Meanwhile, millions of customers remain on poor value standard variable rates, which are £300 more expensive than the cheapest deals on the market.
It is also estimated that network maintenance costs account for around £250 of a typical annual dual fuel bill of around £1,100.
But under the new plans, Brits should be able to save between £15 - £25 in a year, in what Ofgem describes as “significant savings" for consumers"
Ofgem said that the "tougher approach" would set its lowest ever cost of equity range – the amount network companies pay their shareholders.
How to switch suppliers and save £300
SWITCHING suppliers is the best way you can cut your energy bills. But recent research from MoneySuperMarket found that households are throwing away up to £300 a year by not bothering. Here's what you need to do.
1. Shop around - If you're on an expensive Standard Variable Tariff (SVT) deal you are throwing Away up to £300 a year. Use a comparion site like MoneySuperMarket.com or EnergyHelpline.com to see what best deals are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount usually for 12 months.
2. Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information - which you can find on your bill - to hand to give the new supplier.
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
Ed Molyneux, from consumer collective the Big Deal said that it was "about time" that Ofgem cracked down on these monopoly profits.
He said: “The profits end up on consumers bills, so its vital they work in a consumers interest, not company shareholders.
“But this is just a first step, Ofgem should look next at the ridiculous energy postcode lottery where some people pay as much as £139 more for their energy based on where they live. This would make network charges fairer for all.”
Gillian Guy, from Citizens Advice, said Ofgem's announcement was a "step forward" for UK consumers.
More on money
She added: "Curbing the ability of energy network companies to make excessive profits, limiting the price control to five years, and ensuring a greater voice for consumers are all measures that should take us closer to a towards an energy market that genuinely works for consumers.”
POSTCODE LOTTERY Why your energy bill could be up to £62 more depending on where you live
Just last week, E.On announced a price hike for 2 million customers by up to £50 from next month.
In November, Ofgem promised to crack down on greedy gas and electricity network firms after The Sun revealed their excessive profits are ramping up bills.
Boss Dermot Nolan said the watchdog will tighten controls on the firms who have the local monopolies on the wires and pipes that get electricity and gas to our homes.
An investigation by The Sun’s exposed how the ten firms make a combined £7.5billion a year in profit and pay their fat-cat bosses up to £6million a year.
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