Britain's energy regulator has given its final approval for a massive £28 billion investment into the nation's gas and electricity networks, a decision that will see household bills rise to cover the costs.
Investment Details and Bill Impact
In its definitive verdict on price controls for the next five years, Ofgem has increased the allowed investment spend from the £24 billion it provisionally approved in the summer. The watchdog stated this higher level of funding is necessary to upgrade critical national infrastructure.
The financial package will see £17.8 billion directed to gas transmission and distribution networks and a further £10.3 billion allocated to strengthen the UK's high-voltage electricity grid by 2031.
However, this substantial investment comes at a direct cost to consumers. Ofgem confirmed that the network charges on energy bills will increase by £108 by 2031. This is a rise from the £104 estimate published in its draft plans last July. The increase breaks down to £48 for gas networks and £60 for the electricity grid.
Long-Term Savings vs. Short-Term Pain
The regulator was keen to stress that while bills are going up, the alternative would be worse. It insisted that energy bills would be even higher without this approved investment. The funding is designed to future-proof the UK's energy system, enabling a greater shift to renewable power and reducing reliance on volatile imported gas.
Ofgem argues that when savings of around £80 are factored in, the net increase to the average annual household bill is closer to £30, or about £3 per month. It expects costs to fall in future years as increased renewable electricity generation drives down wholesale power prices.
This announcement follows the recent energy price cap change, which will see overall bills rise unexpectedly by 0.2% from January 2026 due to increases in government policy costs.
Regulatory Scrutiny and Government Response
Ofgem's Chief Executive, Jonathan Brearley, emphasised that this was "not investment at any price." He stated, "Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget."
The final £28 billion figure represents a compromise. Ofgem reviewed initial plans from network companies totalling £33 billion and made reductions of over £4.5 billion. However, it increased the amount from its July proposal after push-back from firms who argued more was needed for extra electricity transmission development and infrastructure health.
The Department for Energy Security and Net Zero (DESNZ) called the spending "essential" for energy security. It highlighted government support, noting that Chancellor Rachel Reeves announced in the recent Budget a £150 cut to power bills next April by scrapping the previous Energy Company Obligation scheme.
A DESNZ spokesperson said: "Upgrading our gas and electricity networks after years of underinvestment is essential to keep the lights on and ensure energy security for our country."
The investment is slated to fund around 80 new power projects, including new power lines and substations, to handle electricity from new renewable sources and remove grid bottlenecks.
