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David Prosser: Ofgem has plenty of work to complete

Friday 26 February 2010 01:00 GMT
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Outlook The Independent is among the leading campaigners for lower energy bills and the figures unveiled by Centrica yesterday – in particular its British Gas subsidiary – will strengthen our case. Though British Gas is now one of the cheapest suppliers in the UK marketplace, further cuts to bills are warranted and its rivals have lots of catching up to do.

Still, do not make the mistake of thinking energy prices will fall substantially in the years ahead. Ofgem, the regulator, reckons the average household will be spending around £2,000 a year on gas and electricity by 2020, 20 per cent more than now. And that is assuming we do not see another spike in the cost of wholesale gas prices. For all the current debate about how best to structure our energy market for a low carbon future, there is little doubt about who will pick up the lion's share of the £200bn bill for bridging Britain's energy gap while meeting our ambitious emissions targets. It won't be the energy industry, that's for sure.

With a blueprint for that transformation unlikely before 2012, irrespective of who wins the election, the majority of the price rises that will pay for it are likely to come in the second half of the current decade. But come they will.

In one sense, it's good timing that we are due to make this investment at a time when emissions targets are looming – better to only have to overhaul our infrastructure once. But everyone will have to share the burden of the cost of that overhaul.

What this does mean, however, is that it is even more important that customers are not being overcharged for their energy. Ofgem has plenty of work to do – and not just on thinking about the energy markets of the future.

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