Ofgem has finalised its price control for the RIIO-2 Framework 2021-26, confirming a huge investment that will improve and reduce the cost of services to customers and the impact energy networks are having on the environment.
£30 billion upfront funding will be issued to the network companies that supply gas and electricity round Britain, which will enable Ofgem to give the go ahead on crucial service, maintenance, upgrades and repairs to take place.
Ofgem is also making available funding for future green projects. Over the next five years companies can make propositions to Ofgem aimed at eliminating emissions from the energy system, and Ofgem will give the green-light accordingly.
As much as another £10 billion could be available for these green projects, however there is no limit, it is just subject to companies and the propositions they make to Ofgem.
Energy customers will also see a £2.3 billion saving over the course of the RIIO-2 Framework, equivalent to an average bill reduction of £10 after inflation. This is due to greater efficiency from companies and lowering returns on shareholders by 40% to bring them in line with current market levels.
Ofgem’s Chief Executive Jonathan Brearley said:
“Our £40 billion package massively boosts clean energy investment. This will ensure that our network companies can deliver on the climate change ambitions laid out by the Prime Minister last week, whilst maintaining world-leading levels of reliability."
“These costs must fall fairly for consumers. We are reducing the amount paid to shareholders so that they are closer to current market levels. This means that companies can attract the vital investment we need whilst making sure that consumer don’t pay more than is necessary to achieve this."
“We are also ensuring that £132 million is earmarked to support the most vulnerable in society, including carbon monoxide initiatives and funding new connections for those most struggling with their bills.”