Your energy bill has gone up to pay for green technology that’s not being used
While some other distribution companies said their projections had been accurate, others saw much lower uptake of green technology than expected.
SP Energy Networks, which manages the network in north Wales, the north west of England and parts of Scotland, said it had seen a tiny fraction of the expected heat pump installations, with 1,100 recorded compared to the predicted 99,800 by 2021.
In its draft report submitted to Ofgem, UKPN said it had been “impossible to predict accurately” the speed of net zero changes.
It added: “In the past, customers have been asked to pay for network reinforcement that has proven to be unnecessary”, adding that predictions “proved to be widely inaccurate; only 20 per cent of the LCTs [low-carbon technologies] that were forecast actually materialised.
“As a result, customers ended up paying for investment that was not required and owners of regulated network businesses earned greater than expected returns, both damaging the legitimacy of the sector.”
Gillian Cooper, head of energy policy for Citizens Advice, said: “We’ve consistently called for any surplus funding to be returned to customers.
“But excess investment shouldn’t happen in the first place. With a more flexible approach to funding - so it’s only provided when there’s confidence it’s needed - the networks can be upgraded successfully.
“Network companies are allowed to make a profit on what they build. This ultimately comes out of people’s pockets - the more profit they’re allowed to make, the higher people’s bills will be.
“If they’re allowed to make too much, it encourages unnecessary investment. It’s vital that networks only build what’s needed so that we all benefit from a net zero that is value for money.”
Martyn James, of consumer group Resolver, said people had been holding off installing green technology due to high costs and uncertainty.
He said: “There’s a whole argument, particularly with heat pumps for example, over whether you wait it out until the technology comes down in price.
“Most people I’ve spoken to who are specialists in this area are expecting prices to come down dramatically in the coming years.”
A spokesman for UKPN said: “In our proposed business plan for 2023-2028, we are taking an innovative approach to offer a blueprint for the lowest-cost pathway to net zero.
“Overall we propose a 15 per cent reduction in our part of the electricity bill in real terms, while enabling customers to benefit from using more low carbon technologies in future.”
An Ofgem spokesman said: “Our tough new round of price controls will save consumers money, whilst pushing companies to go further on decarbonisation and ensuring we retain one of the world’s most reliable energy systems.
“The new controls will also be much more dynamic, using more in-period mechanisms that enable companies to adjust their spending forecasts according to changing infrastructure requirements, which will also help ensure best value for consumers.”
Gloss