Britons overpaid electricity network operators 800 million pounds – watchdog

LONDON (Reuters) – Households in Britain have overpaid its electricity networks at least 800 million pounds over the current eight-year (2013-2021) regulatory period, a parliamentary watchdog said on Thursday.

Britain’s energy infrastructure, such as gas pipes and electricity cables, is owned by several firms, including SSE, National Grid and Iberdrola’s Scottish Power.

They have been criticised by the opposition Labour party, which last year said it would take energy networks back into state ownership if elected.

Under energy regulator Ofgem’s price control system network operators present investment plans setting out the work they will do and its cost. Ofgem assesses the plans and sets limits on the profit the network operators can make.

Britain’s National Audit Office (NAO) said Ofgem had allowed some companies to set cost budgets too high and network performance targets too low, while the eight-year regulatory period was too long and could delay investments.

“If Ofgem had placed greater weight on the most up-to-date evidence on network company risk, consumers could have paid at least 800 million pounds less in total,” it said in a report.

Network costs account for about 20% of an average electricity bill equivalent to about 130 pounds a year.

The watchdog said the networks had provided good service and met many targets regarding safety, environmental concerns and reliability, with Britain suffering fewer power cuts than most other EU countries.

Ofgem acknowledged consumer costs have been higher than necessary, but said it was improving the system.

“Our tough new round of price controls will lower returns to save consumers money,” Akshay Kaul, its director of network price controls, said in a statement.

New, shorter five-year price control periods will be adopted, while the amounts companies can return to shareholders have also been cut.