Energy network companies have previously come under fire for making 'unjustified profits' and adding hundreds of pounds to household bills
The energy market regulator Ofgem has launched an investigation into a UK gas distributor over concerns about whether it maintains an efficient pipeline system.
Gas and electricity network companies are largely unknown by consumers but they provide a vital role in transporting energy around the country.
They have come under fire from consumer groups for making billions in "unjustified" profits for shareholders and adding hundreds of pounds to household bills.
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Ofgem said on Wednesday that it is investigating whether Cadent kept and maintained records for all of its gas pipes (known as risers), whether it has the appropriate systems in place to do so and, as a consequence, whether its system is “economical and efficient”.
The announcement comes a day after British Gas hit customers with a 5.5 per cent price hike, taking the price of its standard tariff to £1,161 for a typical dual fuel customer.
The energy firm said the increase was due to rising wholesale and policy costs, and blamed government policy for putting more pressure on customers' bills.
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Cadent owns, operates and maintains four of the eight regional gas distribution networks in the West Midlands, North West, East of England and North London and has a responsibility to keep records of these, Ofgem said.
Last year, research by Citizens Advice found that gas and electricity distributors were on target to make an average 19 per cent profit margin over eight years, handing an average 10 per cent return back to shareholders, despite the “fundamentally low-risk” nature of the business.
The companies control the network for the whole country, with each having a monopoly over a geographical area.
Customers have overpaid by £7.5bn – an average of £285 per household – over the last eight years because of errors in judgment made by Ofgem in pricing the network contracts, Citizens Advice found. It said the money should be refunded to customers.
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- gas bills
- Cadent
- Citizens Advice
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