Energy networks could make double the profit Ofgem outlined today

Ofgem must make sure electricity networks are giving consumers value for money and that any profit extensions for good behaviour are truly deserved, says Citizens Advice.

Today Ofgem announced electricity networks are allowed to earn a 6 per cent profit. Under the payment of incentive scheme networks can make more profit if they do extra things like respond better to customers’ problems or receive fewer complaints, this means profits could creep up towards double figures. Citizens Advice wants Ofgem to make sure the extra efforts networks make deserve these payments.

The regulator also highlighted how the electricity distribution part of bill to fall on average by £12 in real terms average a year from April 2015

Citizens Advice Chief Executive Gillian Guy said:

“Good behaviour incentives means electricity networks could make double the profits set out by Ofgem today. Around one pound in every seven of people’s electricity bills goes towards network costs. With the cost of getting power to people’s homes making up around 16 per cent of electricity bills Ofgem needs to make sure consumers aren’t overpaying for this service.

“A £12 reduction in real terms shows the regulator understands the pressures on household budgets. But Ofgem must put in place strong checks to make sure the networks deliver what they are promising and consumers are receiving value for money.

“The commitments to improve how networks help vulnerable customers when power goes down are also an important step forward. The storms at Christmas and flash floods this week show that bad weather can strike any time of year and networks need to be prepared.

“With a competition investigation trying to get to the bottom of whether consumers are paying a fair price to heat and light their homes, the CMA should consider whether energy networks should be included in the investigation.”

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Notes to editors:

1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.