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Ofgem warns infrastructure upgrades will push energy bills up

Matt Ridout
by Lovemoney Staff Matt Ridout on 19 July 2012  |  Comments 12 comments

Ofgem wants to see the gas and electricity infrastructure improved. And its customers like you and me that will foot the bill.

Ofgem warns infrastructure upgrades will push energy bills up

Ofgem have announced that it believes that £22 billion must be allocated to projects to improve the UK’s gas and electricity networks. The impact of this investment on the consumer could be felt as early as next year, with energy bills expected to rise by £7 next year to cover the cost and to jump an additional £15 by 2021.

Although these numbers may perhaps seem small, added on top of highly fluctuating energy costs they can have a great impact on the average bill-payers expenditure. Ofgem suggests that the work is crucial, with new power lines, wind farms, and improving high and low pressure gas networks planned.

Any additional costs on top of energy bills will be a worry to households around the UK, as energy costs are currently a major part of each household’s monthly expenditure. To protect against any future impact we recommend comparing and switching energy suppliers regularly. With a number of new online and fixed tariffs available, now is the perfect time to compare your suppliers.

Current cheapest deals

 

Supplier

Tariff

Average Cost

Average Saving*

Notes

1

Scottish Power

Online Fixed Price Energy November 2013

£1,052

£270

Fixed until 31 Oct 2013

2

EDF

Blue + Price Promise September 2011

£1,054

£268

Fixed until September 2013

3

Scottish Power

Online Energy Saver 19

£1,055

£267

Guaranteed discount until 31st July 2013

4

npower

Bill Saver August 2013

£1,061

£261

Guaranteed discounts until 31st August 2013

5

npower

Energy Online October 2013

£1,064

£258

Guaranteed discount on standard prices until 31st October 2013, cancellation fees apply

* against typical bill of £1,345 per year as estimated by Ofgem (including adjustment of £23 for recent price drops). All costs are for a yearly average usage dual fuel household paying by monthly direct debit. Average usage defined by Ofgem as 16,500 kWh p.a. of gas and 3,300 kWh p.a. of electricity.

Compare the latest energy tariffs with lovemoney.com

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Comments (12)

  • Mike10613
    Love rating 599
    Mike10613 said

    The government is making low cost finance available to commerce and industry. Why can't the energy industry use that? It could improve the infrastructure and efficiency at the same time. The savings due to improved efficiency could finance the maintenance of the infrastructure. Or is it just an excuse for higher and higher bills to pay the executive bonuses?

    Report on 20 July 2012  |  Love thisLove  1 love
  • Megatyte
    Love rating 21
    Megatyte said

    We've already paid for improvements to the infrastructure. Isn't that one of the things that standing charges are supposed to cover?

    Instead of going on upgrading it's all been paid in shareholder dividends.

    And don't even start me on the issue of useless wind farms.

    A H

    Report on 20 July 2012  |  Love thisLove  1 love
  • bobmattfran
    Love rating 58
    bobmattfran said

    The energy companies have the cheek to ask consumers to pay for their infrastructure. When i go to the supermarket, I don't expect to be billed more for them building a new supermarket, or replacing the computer system, time these people were all told to take a hike. They saved money, all of them by getting rid of meter readers and only reading the meter once a year. Time to tell them to get lost. But this government won't do it they haven't got the guts or the inclination.

    Report on 20 July 2012  |  Love thisLove  0 loves
  • T5P8
    Love rating 33
    T5P8 said

    Our industries must be the envy of the world, we British just sit here and take everything thrown at us. We have no mechanism to impact on industries or government.

    Report on 21 July 2012  |  Love thisLove  0 loves
  • Perry525
    Love rating 25
    Perry525 said

    The thing that gets me is, that the National Grid is a public profit making company, they make loads of money every year......they should be expected to pay for the upgrade themselves.......every other company does.

    Also last year we used less electricity and gas, and we can expect to use less in future......with all this insulation.

    Why does the Government think there will be an explosion in use, when thousands are having their benefits cut and people in general are finding it hard to pay to heat their homes.

    Report on 21 July 2012  |  Love thisLove  0 loves
  • aland55
    Love rating 2
    aland55 said

    If people would stop moaning and switch suppliers then prices might come down!

    Report on 21 July 2012  |  Love thisLove  0 loves
  • OorWullie
    Love rating 38
    OorWullie said

    How can consumers pay higher charges when the Government has reduced the value of the currency frequently in the last couple of years through its 'quantitive easing' policy forcing many into penury?

    Average annual cost reputed to be £1052; why then am I having to pay £2424 pa (combined bill) for a small 3 bedroomed bungalow the size of a 'but-and-ben'?

    Report on 21 July 2012  |  Love thisLove  0 loves
  • Megatyte
    Love rating 21
    Megatyte said

    @aland55

    Switching suppliers will have no effect on this, it will be across the board as it's an infrastructure charge.

    It appears that Ofgem, who are supposed to be working for the consumer (but funded by the utility companies (so funded by the consumer)), have already rubber stamped this one, despite the consumer already paying for it.

    A H

    Report on 22 July 2012  |  Love thisLove  0 loves
  • Abigail Thornton
    Love rating 11
    Abigail Thornton said

    In financial terms this article made me chuckle:

    On the one hand you've got:

    The impact of this investment on the consumer could be felt as early as next year, with energy bills expected to rise by £7 next year to cover the cost and to jump an additional £15 by 2021.

    On the other you've got:

    * against typical bill of £1,345 per year as estimated by Ofgem (including adjustment of £23 for recent price drops).

    So prices have just fallen by more than the expected rise in nine years’ time - so we're currently better off than we were. Unfortunate timing for the article.

    Although these numbers may perhaps seem small, added on top of highly fluctuating energy costs they can have a great impact on the average bill-payers expenditure.

    This statement is confusing: it implies that a known, small fixed rate is having a greater impact than a 'highly fluctuating' cost. Whereas the opposite is true. 'Highly fluctuating' has a different meaning to, and cannot be used interchangeably, with 'high'.

    As per Megatyte (Brilliant name BTW!): This cost is unavoidable, so it's spurious to suggest switching anything.

    Report on 23 July 2012  |  Love thisLove  0 loves
  • jegwe
    Love rating 20
    jegwe said

    I agree with bobmattfran. The cost of the infrastructure is a business expense. Any properly run company will put money by to invest in plant and machinery to enable its business to remain competitive. The costs should be taken out before profits are distributed.

    The problem is there is no competition. They decide their profit margins and then spend what is left on providing the service. They then blackmail us with the threat that we will become uncompetitive as a nation (true) if we do not have a proper infrastructure and government backs them. They then allow these companies to take even more of the money that people should be saving for pensions are spending in other sectors of the economy thus ensuring that we remain in recession.

    I do not blame the companies for trying to increase money for their shareholders, but the government should be looking at the overall wellbeing of UK plc and should not allow greedy companies to prevent recovery and devlopment by neglecting infrastructure.

    Report on 23 July 2012  |  Love thisLove  0 loves
  • worlduser
    Love rating 4
    worlduser said

    Megatyte says:

    We've already paid for improvements to the infrastructure. Isn't that one of the things that standing charges are supposed to cover?

    Instead of going on upgrading it's all been paid in shareholder dividends.

    I could not agree more with your statement.

    I would just add one more thing. BONUSES! These are supposed to be extra incentive to work hard and efficiently. Thus reaching TARGETS (achievable targets).

    Salaries are for doing their job properly, with the reward being, keeping their job. Bonuses should only be for success and target achievement and not guaranteed as part of salary.

    These companies are failing dismally, and in spectacular fashion. They have ridden the crest of the wave so long now on the back of their predecessors (who built the infrastructure; "centuries ago") with no competition. There appears no real competition, in fact, it seems more like coalition.

    It has finally been realised everything is starting to fall apart. Not surprising since every "fix" has been a "sellotape and string job"! Saving money is their excuse.

    Where has all this money gone? Indeed, have they EVER had a pot for infrastructure improvement!

    Report on 25 July 2012  |  Love thisLove  0 loves
  • worlduser
    Love rating 4
    worlduser said

    Further to my comment on wednesday 25th July....Did you hear the recent news on television about a (100 year old) main water pipe burst in London causing a major flood? - Need I say any more!

    Report on 26 July 2012  |  Love thisLove  0 loves

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