Energy companies have criticised proposals by the industry’s regulator to cut customer’s bills and spend more on green investments.
Under Ofgem’s plans, households could see their bills cut by £20 a year while firms spend £25bn in the next five years to invest in greener energy.
Ofgem said it wanted “a greener, fairer energy system for consumers”.
However, National Grid, SSE and Scottish Power all said that the regulator’s plans were flawed.
Under Ofgem’s plan, the return energy firms will be allowed to make from their investments will be nearly halved.
The regulator said this would mean that “less of consumers’ money goes towards network companies’ profits, and more towards driving network improvements,” it said.
Ofgem estimated that cutting returns would save more than £3.3bn over the next five years, which should cut household bills by about £20 a year.
The regulator added that investing in the energy network of the UK was low-risk and should be an attractive option to investors.
“Strong evidence from water regulation and Ofgem’s offshore transmission regime shows that investors will accept lower returns and continue to invest robustly in the sector,” it said.
However, National Grid said it was “extremely disappointed” with the plans.
“This proposal leaves us concerned as to our ability to deliver resilient and reliable networks, and jeopardises the delivery of the energy transition and the green recovery.”
Energy firm SSE said the proposal was likely to be challenged through the Competition and Markets Authority (CMA).
“Ofgem’s first pass at a settlement resembles a worrying return to austerity,” Rob McDonald, the managing director of transmission at SSE, said.
“At present the draft settlement does not strike the right balance for all stakeholders and without significant changes during the consultation period, there is a real risk that the critical investment in Britain’s electricity networks will be unnecessarily slowed down by an appeal process via the CMA, which is not in any stakeholders’ interests.”
Scottish Power called Ofgem’s plans “a massive missed opportunity”.
“Instead of investing more in creating green jobs and skilled apprenticeships in every community, at a time when the UK needs them most, this is a short-sighted return to austerity politics.
“Nobody benefits from this half-baked plan. It’s bad for jobs, bad for apprenticeships, bad for training and bad for the UK supply chain.
“Net Zero can be an accelerator of the economic recovery, but only if private companies are given the right conditions for investment. Slamming the door in investors’ faces by offering one of the lowest rates of return of any developed country traps the UK in an economic cul-de-sac.”