Ofgem response to npower’s energy explained report

Press release

Publication date

Industry sector

Supply and Retail Market

A spokesperson for Ofgem said:

“We welcome npower’s effort to inform the energy debate, however their data on network costs is incorrect and misleading. We offered to help npower improve the accuracy of their numbers for network charges and it is disappointing that they did not engage fully with us until after the document had been circulated. Ofgem directly regulates the money that network companies can earn through charges. Given this level of certainty we can see that after 2014 network costs per household are expected to remain broadly flat in real terms. It is unclear how npower can state with any authority otherwise.”

Background on network costs since privatisation

Ofgem has a strong track record of bearing down on costs, while delivering network improvements at value for consumers. During the first 15 years after privatisation, charges paid by suppliers for the use of networks reduced by almost 50 per cent under our regulation. In recent years there has been a planned rise in network costs in order to build new networks to help connect low carbon energy, replace old gas mains and renew ageing parts of the network. After 2014, network costs per household are expected to remain stable in real terms (i.e. excluding inflation) until at least the start of the next decade.

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Notes to editors

1. Ofgem is the Office of the Gas and Electricity Markets, which supports the Gas and Electricity Markets Authority, the regulator of the gas and electricity industries in Great Britain. The Authority’s functions are set out mainly in the Gas Act 1986, the Electricity Act 1989, the Competition Act 1998 and the Utilities Act 2000. In this note, the functions of the Authority under all the relevant Acts are, for simplicity, described as the functions of Ofgem.

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