Households across the UK are footing the bill for billions of pounds in excess profits made by electricity distribution companies – the firms which run the wires that take power into people’s homes. New analysis released today by Citizens Advice shows just how much consumers in different regions are paying over the odds and which firms are profiting the most.
Last year, landmark research by Citizens Advice found that decisions by the energy regulator Ofgem – in the way it calculated price controls across the gas and electricity networks – have gone in industry’s favour, costing consumers a total of £7.5bn. This amounts to an average of £285 per household, over 8 years.
A number of companies responded to Citizens Advice’s research by taking voluntary action to return money to consumers in the current price control. But to date, no electricity distribution company has returned these unjustified profits.
Today’s analysis shows the regional disparities in the unjustified profits being made by electricity distribution firms and the costs being borne by consumers. Citizens Advice is calling on electricity distribution networks, as well as the remaining gas distribution companies (Northern Gas Networks, Wales and West Utilities), to take action and return this money to their customers.
The charity is also calling on Ofgem to ensure that this does not happen again by making sure that the next set of price controls deliver a better deal for consumers.
The research shows that even in the regions least affected (London, Southern and South East England, the North West and Eastern England), networks are set to make excess profits averaging £75 per household across the 8-year price control. Meanwhile electricity distribution companies in North Wales and Merseyside, South West England and Northern Scotland are set to make the highest excess profits.
The table below details the charity’s calculations on how much it believes customers in different regions should receive back from electricity distribution companies as a rebate on their bills.
|Region||Rebate per household||Electricity distribution company|
|Merseyside and North Wales||£125||Scottish Power Energy Networks|
|South West England||£110||Western Power Distribution|
|Northern Scotland||£110||Scottish and Southern Energy Networks|
|South Wales||£105||Western Power Distribution|
|West Midlands||£105||Western Power Distribution|
|East Midlands||£95||Western Power Distribution|
|Southern Scotland||£90||Scottish Power Energy Networks|
|North East England||£80||Northern Powergrid|
|Southern England||£75||Scottish and Southern Energy Networks|
|South East England||£75||UK Power Networks|
|North West||£75||Electricity North West Limited|
|Eastern England||£75||UK Power Networks|
|London||£75||UK Power Networks|
Gillian Guy, Chief Executive of Citizens Advice said:
“People across the country are overpaying on their energy bills, because some network companies are making unjustified profits.
“Ofgem has signalled its intention to deliver a tougher settlement on the network companies and a better deal for consumers. The regulator will undoubtedly face strong and sustained opposition as the networks try to protect the status quo. Ofgem must hold its nerve and make sure that the next price control delivers much better value for consumers.
“But rather than wait for the next price control to be in place, firms which haven’t already should return these unjustified profits to consumers as a matter of priority.”