Energy regulator Ofgem has given approval to £17 billion of spending on upgrading the way electricity is distributed in the UK.
As a result, customers could stand to shave an average of £12 a year from their energy bills, as the proposals lay out how spending on Britain’s power networks will be cut.
The money will be spent on upgrading and maintaining the networks that supply electricity across the country for eight years from 2015.
Ofgem revealed that the decision would cut consumer energy bills as spending was lower than companies were currently permitted.
Potential cuts to utility bills
Around 8% (some £111) of an annual dual fuel bill funds power distribution networks at present, but that figure will fall to £99 from next April according to Ofgem.
However, variations will exist across the country as different distribution networks are run by different companies.
For instance, those in the North West could see annual savings of £26 while those in the South East could stand to save just £5.
The cost to consumers of using energy networks is also set to rise next year, according to Ofgem chief executive Dermot Nolan, although an average £4 net reduction in costs should still be passed onto customers.
Preparing for the future
Wholesale gas and power costs are also reportedly falling and it could force some of the major suppliers to reduce their costs, although this is by no means guaranteed.
“In a competitive market we would expect suppliers to pass on this saving to consumers,” explained an Ofgem spokesman.
The finances will also help the networks to prepare for the handling of new green technologies, such as the installation of wind turbines and solar panels.
Any savings that can be passed on to customers will be a benefit in the long-term, but people will have to carefully manage their accounts to cover their energy bills.
Prepaid card options
One option is to load funds onto a prepaid card in order to cover bills – ideal for situations where monthly bills do not fluctuate by a large amount.
Only the funds on the card can be spent, so it’s a simple way of ensuring a level of control over finances while it can be topped up if necessary.
The cards are also not linked directly to a bank account, which makes fraudulent activity a lot more difficult.
Alternatively a card could be used to manage additional finances once bills are paid, as they can be used in a similar fashion to a debit card for both online and in-store purchases.