UK energy networks get go-ahead to invest in green revolution

(The Guardian, 8 Dec 2020) Power companies will be allowed to make bigger returns as Ofgem relaxes proposals.

The industry regulator will allow energy networks to plough at least £40bn into the green revolution and make higher returns on their investments, after companies threatened an unprecedented rebellion against its plans to save homes £20 a year on their bills.

Ofgem’s plans, set out on Tuesday, will halve the savings energy bill payers can expect over the next five years to £10 a year after softening the crackdown on company profits it proposed over the summer.

The regulator has given the green light for investments in electricity grid upgrades, which are paid for through energy bills, to climb by a fifth compared with its earlier proposals, which sought to limit spending to £25bn.

Ofgem will also allow the companies to make returns of 4.3% on their energy network investments, up from its early plan to cut them to a record low of 3.9% but still well below the returns of 7-8% allowed over recent years.

The proposals sparked fierce opposition among energy network companies, which called on Ofgem to rethink its proposals or risk an investigation by the Competition and Markets Authority.

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The Guardian, 8 Dec 2020: UK energy networks get go-ahead to invest in green revolution