Power firms accept Ofgem price controls

All seven owners of Britain's electricity distribution networks have accepted Ofgem's final proposals for the 2010-2015 price control.

The seven companies between them own the 14 regional networks which transport electricity from the national grid to homes and businesses. Over the next five years they will be able to invest up to £7.2 billion in the upgrading their networks. This includes a £500 million sustainability fund allowing them to undertake large-scale trials of smart grids and other technology required in a low carbon economy. The impact on household electricity bills will be an increase of £4.30 per year on average across the country. The new price control will run from April 1 until March 31 2015.

Steve Smith, Senior Partner, Local Grids and RPI-X@20, said: "We have set a tough but fair price control for the companies so they can invest to maintain high performance and adapt their networks to the low-carbon economy. The package will be delivered at a fair price to consumers who will benefit from improved service."

Ofgem's focus on sustainable development as a key part of the price control package has been welcomed by the Sustainable Development Commission (SDC). It said the price control "provides a practical example of how existing policy frameworks can be adjusted to better deliver the transition to a low carbon economy in the short-term, pending the conclusions of their more fundamental, ongoing review of the approach to network regulation under the RPI-X@20 project."

The SDC noted that following its 2007 report on Ofgem, progress has been made in all the areas it identified to give the energy sector more incentives to reduce greenhouse gas emissions.