UK energy regulator rejects pricing plans of energy companies

UK's energy regulator, Ofgem, has rejected pricing plans from five of the six companies that own and operate the country's local electricity network and has instead imposed a new set of price controls aimed at cutting distribution costs for customers.

The regulators statement said, the firms' plans "did not sufficiently demonstrate value for consumers".

Western Power Distribution (WPD), one among the six big companies, was the only company to have achieved eligibility for having its price controls agreed early. This would lead to an estimated 11.6-per cent decrease in distribution costs for nearly 8 million WPD customers.

International Business Times quoted Hannah Nixon, senior partner for distribution, at the company, as saying that WPD understood that energy costs were a big concern for consumers and it set a high target for demonstrating value for money.

She added WPD was pleased that nearly all companies had pledged to cut bills, but WPD felt that most companies could go further in cutting their costs and expect to see further improvements when they resubmitted their plans in March.

She added, WPD responded well to Ofgem's challenge to demonstrate good value and drive improvements for consumers while reducing the distribution part of their bill.

Meanwhile, according to the industry regulator's report, Britons were sitting on a £900-million energy debt pile.

Ofgem's report showed over 1.3 million electricity accounts and nearly 1.2 million gas accounts were in the red.

The figures related to the end of last year, which meant they did not take account of price rises earlier this year, and came before this winter's wave of increases.

However, Ofgem's report revealed the number of disconnections by suppliers was down across the UK to just 557 last year.

The online edition of The Daily Mirror, quoted Ofgem's Sarah Harrison as saying, energy bills were rising and household budgets were very tight.

It was more important than ever before that energy suppliers did all they could to help customers who were struggling to manage bills and were in debt.

She added, Ofgem's regulations put obligations on suppliers and provided protection for consumers and today's report showed how suppliers were responding to these requirements.

She said, levels of disconnection were at an all-time low and suppliers were working to help customers in debt.