Power bills are to be reduced by £12 a year on average after new price controls were agreed by five of the six companies that run Britain’s electricity network.
Regulator Ofgem said the cut has been driven by £2.1 billion of savings it has secured from the companies’ business plans since last year.
Ofgem’s proposals will see the distribution companies spend £17bn to upgrade and maintain Britain’s local electricity network.
At the same time, the distribution part of the energy bill – which accounts for 8 per cent of an annual dual fuel bill – will be on average £12 a year lower than it is today for the eight-year period between April 2015 and 2023.
Ofgem chief executive Dermot Nolan said: “As energy regulator, a core part of our role is to set price controls for these monopoly network companies.
“This is the only part of the energy bill Ofgem directly controls and our plans today will deliver better customer service and efficient investment at a lower cost for the customer.”
However, SSE finance director Gregor Alexander said the Perth-based power supplier was “disappointed” with today’s announcement, in particular Ofgem’s proposals on efficient financing and assumptions about the scope of further cost reductions across the industry.
He added: “Our aim is to deliver a final settlement that both provides value for money for customers as well as securing the funding required to operate and develop our distribution networks for customers benefit.
“Through the established price control process, we will now be responding to the draft determination as well as engaging further with Ofgem in order to secure this outcome.”