“The regulator has allowed energy network companies to make bigger than expected profits at the expense of household bills, according to its own state of the market report.
Ofgem admitted the companies that run Britain’s energy pipes and wires had earned double-digit returns in the last year despite its efforts to keep a lid on energy bills.
The regulator oversees the business plans of regional gas and electricity networks to keep a rein on how much each firms can spend on their infrastructure, and how much they can claim back through energy bills.
It said that with hindsight it had set the rate of return too high, and that some companies had managed to spend less than planned, to rake in higher profits.
The uncomfortable evaluation has emerged following Ofgem’s decision to appoint its head of networks as its new chief executive. Jonathan Brearley will replace Dermot Nolan when he steps down in February next year.
It said: “The overall costs to consumers of the transmission and distribution networks have turned out to be higher than they needed to be.”
The admission is likely to anger critics of the companies, including UK Power Networks and National Grid, who have warned that networks are hiking up household energy bills while paying bumper shareholder payouts to foreign investors. …”