Call for one-off fuel bills rebate of £285

EACH UK household should receive a £285 one-off rebate on its fuel bills due to excess industry profits, Citizens Advice has said.

Energy customers are subsidising £7.5 billion in “unjustified” profits made by gas and electricity network companies because of errors in judgment made by regulator Ofgem, the charity has claimed.

Citizens Advice has called for energy network companies to return the money to consumers in the form of a rebate through lower bills.

The charity has estimated that price control decisions by Ofgem are allowing the businesses responsible for the UK’s energy networks to make billions in returns on their capital investments.

Consumers pay for energy networks through gas and electricity bills and Ofgem is responsible for restricting this amount, which it does partly by forecasting the cost of building and maintaining energy networks while estimating the level of business risk for investors.

The Citizens Advice report said Ofgem forecasts that network companies will currently earn an average of 10% return for their investors, which is an average 19% profit margin — compared with the 4% margin made by the largest energy suppliers.

But the charity said Ofgem had overestimated the business risk for investors in energy networks, estimating them as 90% to 100% as risky as the average company, when market data suggested a more reasonable figure would be 60%, at a cost of £3bn to consumers.

The regulator also assumed interest rates and returns for government bonds would be higher than they were, costing bill payers £3.4bn, and rewarded companies that inflated their initial estimates for costs by interpreting this as efficiency, at a further cost to consumers of £1.1bn.

Citizens Advice chief executive Gillian Guy said: “Energy network firms are enjoying a multibillion-pound windfall at the expense of consumers. It is consumers who have to pay the £7.5bn price for the regulator’s errors of judgment. We think it is right energy network companies return this money through a rebate.”

Ofgem chief executive Dermot Nolan said: “Today we are setting out our plans for the next price control and along with other utility regulators are signalling that the next price control will be tougher for investors. While we don’t agree with its modelling and figures, the Citizens Advice report raises important issues about network regulation which will be addressed in the next control.”

A SUN Bear, native to the tropical forests of Southeast Asia, sleeps in a tree at Henry Doorly Zoo in Omaha, Nebraska, US, as temperatures reached 95 degrees Fahrenheit with the humid air making it feel like 105 degrees. To help visitors deal with the heat, the zoo installed misting stations, handed out water and opened its gates one hour earlier.