Regulator cuts electricity bills by £15

Electricity customers will see their bills falls by around £15 a year under price plans issued by energy watchdog Ofgem today.

Electricity customers will see their bills falls by around £15 a year under price plans issued by energy watchdog Ofgem today.

Customers using the Economy Seven system will see their bills fall by an average of £7.

The price controls announced by Ofgem - the Office of Gas and Electricity Markets - follow 18 months of consultation between the regulator and the electricity companies, and will come into effect in April next year.

The companies have until December 20 to say whether they accept the controls.

Ofgem warned that those companies which did not accept the price conditions would be referred to the Competition Commission.

The price cuts will benefit around 22 million customers and represent a reduction of around 6% on the typical household electricity bill of £251 a year.

Callum McCarthy, director general of Ofgem, said the price controls were a basic standard for electricity bills, but that there was competition between companies to be "the main driver of prices".

"To make sure that all electricity customers can benefit, we are establishing a safety net. That safety net ensures that on average standard domestic prices will come down by £15. In practice we expect competition will deliver much lower prices. I believe prices can and will come down much more," he said.

Mr McCarthy added that this round of price controls was likely to be the last imposed by the regulator.

The UK's 14 public electricity suppliers are now allowed to compete freely with each other for customers.

Since deregulation was completed in May, 3 million customers have moved to a new supplier.

The proposed cuts in electricity prices come just a week after households learned of reductions in both gas and water bills.

Last week Ofgem announced a cap on gas bills which will save a typical household £14 a year.

Water industry regulator Ofwat introduced price controls which it said would reduce average water bills by £30 a year by 2005.