Distribution Price Controls
Electricity distribution networks carry electricity from the transmission systems and generators that are connected to the distribution networks to industrial, commercial and domestic users.
There are 14 licensed distribution network operators (DNOs) each responsible for a distribution services area. The 14 DNOs are owned by seven different groups. There are also four independent network operators who own and run smaller networks embedded in the DNO networks.
Domestic, and most commercial, consumers buy electricity from suppliers who pay the DNOs for transporting their customers' electricity along their networks. Suppliers pass on these costs to consumers. Distribution costs account for about 20 per cent of electricity bills.
Ofgem administers a price control regime that ensures that efficient distributors can earn a fair return after capital and operating costs while limiting the amounts that customers can be charged. Price controls are set for 5-year periods. The current price controls for electricity distribution networks runs from 1 April 2010 to 31 March 2015.