Ofgem tells energy distribution companies to cut costs

Mark Wiltsher from Ofgem says he expects distribution costs to come down for most customers

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Energy regulator Ofgem has told five of the six electricity distribution companies to cut costs for consumers.

It has rejected their investment plans, believing they should be able to "deliver more for less".

Only Western Power Distribution's (WPD) business plan was approved by the regulator.

WPD's eight millions customers will see a £11.30 reduction in their electricity bills from April 2015, thanks to Ofgem price controls, the regulator said.

WPD, which serves customers in South Wales, the Midlands, and the South West of England, plans to spend about £7bn between April 2015 and March 2023, with £3bn of that being used to upgrade its network.

Distribution accounts for about 19% of the £610 average annual domestic electricity bill, Ofgem says.

While Ofgem admitted that all companies had "responded well" to its price controls - with £2bn in savings achieved since 2012 - it said that "most companies can go further in cutting their costs".

But WPD's plans have been "fast tracked" after demonstrating "it delivered for consumers on all areas", said Hannah Nixon, Ofgem's senior partner for distribution.

The six companies that own and operate Britain's electricity network have to submit their business plans for the next price control period - 2015 to 2023 - to Ofgem for approval.

This is because the 14 different regional distribution networks are monopolies and not open to competition.

The six companies are WPD, Electricity North West, Northern Powergrid, UK Power Networks, SSE Power Distribution, and SP Energy Networks.

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