Household energy bills are set to increase to help fund a £28bn investment in the UK's energy network.
Energy regulator Ofgem has approved this funding as part of its five-year plan to improve electricity and gas grids. While most of the investment will go towards maintaining gas networks, £10.3bn will be allocated to strengthening the electricity transmission network.
Under this plan, households will see an additional £108 added to their energy bills by 2031. However, Ofgem stated that the actual annual increase will be about £30, as the investment is expected to reduce reliance on imported gas and lower wholesale energy costs.
The companies that operate energy networks - including power lines, cables, and gas pipes - are separate from suppliers and hold monopolies in different regions. This plan outlines how they will deliver a safe and secure supply, as well as the cost controls they will face over the next five years, starting next year.
Ofgem chief executive Jonathan Brearley said the investment will keep Britain's energy network among the safest, most secure, and resilient in the world. He emphasized the need for the UK to reduce its dependence on gas, stating that diversifying energy sources will help stabilize electricity prices and protect consumers' bills.
Of the £108 increase, £48 will be for gas and £60 for electricity. Ofgem also said the investment will deliver about £80 in savings, including £50 from expanding the energy grid.
Mr Brearley explained that the £108 increase will be phased in over five years, starting with a 2-3% rise in bills in April and increasing steadily from there.
The regulator noted that the investment will also address inefficiencies, such as offshore wind farms being paid billions each year to switch off because the grid cannot handle their power.
Keith Anderson, chief executive of Scottish Power, said removing these constraints is crucial. He described the investment as the largest wave of upgrades to the electricity infrastructure since the 1950s, making the system fit for the 21st century.
National Gas, which owns and operates Britain's gas transmission network, will receive funding through the Ofgem plan. Chief executive Jon Butterworth welcomed the investment, highlighting the critical role of the gas transmission system in Britain's energy security now and in the future. He said a detailed review of Ofgem's decision will ensure the network remains safe, resilient, and supportive of the country's clean energy goals.
Charlie Kronick, senior climate adviser at Greenpeace UK, said the energy grid urgently needs upgrades and is no longer fit for purpose. He stressed that the funds must be spent effectively, with strong regulation to protect bill-payers and ensure genuine value for money.
Ofgem's announcement follows a government pledge in the Budget to remove certain costs, equivalent to about £150 from a typical annual energy bill.
.svg)
