UK regulator requires power distributors to cut costs for consumers 

November 25 [Mon], 2013, 11:17
British energy regulator has challenged five out of six electricity distribution companies to cut costs for consumers as it rejected the five companies plans for failing to demonstrate value for consumers sufficiently on Friday.Western Power Distribution (WPD) is the only company of the six electricity suppliers having its business plan agreed.The Office of Gas and Electricity Markets (Ofgem),tire changer the government regulator for electricity and gas markets, said that WPD's plan provided "good value for consumers and its price control could be agreed early."It said that its price regulation would see distribution costs cut 11.6 percent for the nearly eight million households in WPD's areas from April 2015.The business plan worked out by WPD, which serves customers in south Wales, the Midlands and the southwest of England, includes around 7 billion pounds (11.3 U.S. dollars) of total expenditure of which around 3 billion pounds for investment to upgrade and maintain WPD's network."We understand that energy costs are a big concern for consumers and we set a high target for demonstrating value for money," said Hannah Nixon, Senior Partner for Distribution."We are pleased that nearly all companies have pledged to cut bills, but we feel that most companies can go further in cutting their costs and expect to see further improvements when they resubmit their plans in March," said Nixon.

The distribution element accounts for 19 percent of the average annual electricity bill, Ofgem said.Britain now has about 14 regional energy distributors, including WPD, SSE, Iberdrola's SP Energy Networks,carbon sheets Electricity North West, Northern Powergrid and UK Power Networks.Ofgem said the six companies had made over two billion pounds of cost reductions since their initial forecasts in 2012.It is estimated that during the price control period, which runs between April 1, 2015 and March 31, 2023, total expenditure will be 27 billion pounds across all companies, of which around 13 billion pounds is for network investment.According to Ofgem,carbon prepreg companies responded positively to the regulator's call to deliver investment efficiently.The improved plans demonstrated that Ofgem's price control efforts have been successful in driving down costs, promoting innovation and stakeholder engagement.However, even with the reductions and good initiatives in the business plans, Ofgem believes there is scope for further improvement."We would expect costs to be reduced further," Ofgem said.Since privatization, Ofgem's price controls have delivered a 25-percent improvement in network reliability and seen the electricity distribution network grow by 10 percent.