£5bn payout cut for energy shareholders
ENERGY giants have been ordered to knock £5billion off bills by cutting shareholder payouts.
Industry regulators Ofgem yesterday announced a clampdown on 14 monopoly firms who distribute gas and electricity around Britain.
But the move won’t kick in for another three years.
And critics said the average saving for customers – £15 to £25 a year – could be wiped out by a predicted wave of price rises.
Network costs add around £250 to the average annual £1100 dual-fuel bill. That helps pay for investment but also feeds through to how much network operators have available to give shareholders.
Ofgem currently set the rate of return in eight-year cycles.
They are proposing to reduce the amount they dish out, and cut the time frame to five years. Ofgem say it will save households more than £5billion between 2021 and 2026.
Jonathan Brearley, Ofgem’s senior partner for networks, said: “Consumers must be confident they continue to get good value for money.”
Gillian Guy, chief executive of Citizens Advice, called the changes “a major step forward”. She added: “These proposals should prevent a repeat of the billions in excess profits energy network companies are making.”
But Victoria Arrington, from the switching website Energyhelpline, said: “The 2021 date might seem far away for some customers.
“Over the coming weeks, we fear a wave of price rises from the Big Six energy providers.
“Even just a two per cent price rise is equivalent to £22 per year.”
The clampdown did not concern the network operators’ investors.
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