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Network charges ‘lower than big six claims’

The government's energy regulator has argued that the impact of network charges is far less significant than energy firms have claimed

Energy companies and Ofgem disagree on the effects of network charges

Energy companies and Ofgem disagree on the effects of network charges

In the last few weeks, five of the big six energy providers have increased their prices for this winter, with rises ranging from the 3.9% announced by EDF earlier this week to the 9.2% British Gas announced last month.

Most of these increases are based on what providers call factors out of their control, such as wholesale prices, the Energy Companies Obligation and network charges.

Network charges ‘increase bills’

Since announcing their increases, four of the big six have put a price on what they believe network charges will add to bills, the Financial Times reports.

npower expects bills to rise by £31, while British Gas predicts the figure will stand at £20. ScottishPower and EDF expect to see £26 and £24 added to fuel bills as a result of these charges.

The charges represent 23% of the average energy bill at the moment, which amounts to approximately £300 per household.

Ofgem disputes claims

However, Ofgem has conducted research to dispute the projections for network charge rises from the big six.

Hannah Nixon, Ofgem’s senior partner for transmission, said: “Our current assessment is that from 2014, prices will be broadly flat.”

The research conducted by the body suggested that by the end of October 2014, network charges could add as little as £15 per household to the cost of an energy bill.

npower and Centrica – which owns British Gas – have both defended themselves against the claims however.

npower said it expected to see a 10% increase in its network costs over the course of the next year, while Centrica added in a statement that network charge costs vary from supplier to supplier.

“£20 is the average increase in transmission, distribution and metering costs that we’re facing in 2014,” it concluded.

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