The industry regulator Ofgem 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.
The Ofgem chief executive, Jonathan Brearley, said the plans would allow companies to attract investment into Britain’s green revolution but would also include a new limit on how much they can pay to shareholders and provide £132mto help protect vulnerable customers.
“Our £40bn package massively boosts clean energy investment,” he said. “This will ensure that our network companies can deliver on the climate change ambitions laid out by the prime minister last week, while maintaining world-leading levels of reliability.”
The regulator will allow companies to invest more than £40bn if they can make the case for it.
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