Energy firms challenge Ofcom proposals that would have cut domestic bills

NINE energy networks have challenged plans by Ofgem that the regulator said would save households money off their energy bill every year.

The networks, including National Grid and Scottish Power, have appealed against the decision from the energy regulator.

The plan would approximately halve the rate of return that firms could take from their investments, but several companies said it may put the investment needed to reach the UK’S environmental targets at risk.

The Competition and Markets Authority (CMA) will decide whether to grant the companies permission to appeal within two weeks.

The CMA said:“the appeals largely focus on the allowed return on investment and the way Ofgem calculated the costs the companies would spend on maintaining and investing in their networks over the next five years.”

Energy companies reacted strongly against Ofgem’s proposals when they were first released in July.

The initial plans limited the rate of return that companies could make off their investments to 3.95%.

These returns are achieved through a charge on household energy bills and cutting them would have saved each UK household around £20, Ofgem said.

But, after hearing further opinions from the sector, which said the decision would put investment in the green transition at risk, the regulator somewhat softened its stance, upping returns to 4.3%, which would slash household energy bills by £10 on average.

Akshay Kaul, Ofgem’s director of networks, said: “Our price control drives a fair price for consumers, improves services and boosts green energy investment.”

Ross Easton, director of external affairs at the Energy Networks Association trade body, said: “The UK’S energy network operators remain focused on providing a low cost, net zero energy system.”