Britain's energy regulator has given the final approval for a massive £28 billion investment programme to upgrade the nation's ageing energy infrastructure, but confirmed the cost will be passed on to consumers through higher bills.
Final Verdict on Five-Year Price Controls
In its definitive decision on price controls for energy network companies covering the next five years, Ofgem has increased the total allowed investment from the £24 billion it provisionally approved earlier in the summer. The final figure now stands at an initial £28 billion.
The regulator stated that this substantial capital injection is designed to modernise and strengthen the UK's energy grid, ensuring future security and reliability. A significant portion, £17.8 billion, is earmarked for gas transmission and distribution networks up to 2031. A further £10.3 billion will be allocated to reinforce the country's high-voltage electricity network.
Impact on Household Energy Bills
Ofgem has acknowledged that its decision to permit the higher level of investment will have a direct impact on household finances. The network charges that appear on energy bills – which constitute roughly a fifth of the average annual energy cost – are set to increase.
By 2031, households will see these charges surge by £108 to cover the cost of the extra investment. This is a rise from the £104 increase outlined in the draft plans released in July. The regulator broke down the increase, indicating it will include £48 for gas networks and £60 for the electricity grid.
Government and Regulatory Justification
A spokesperson for the Department for Energy Security and Net Zero defended the necessary investment. 'Upgrading our gas and electricity networks after years of underinvestment is essential to keep the lights on and ensure energy security for our country,' they stated.
The spokesperson added, 'Without these plans, which were first set out under the previous government, costs would spiral and our security would be compromised.' They also pointed to other government actions aimed at mitigating costs, such as measures in the Spring Budget and the expansion of the Warm Home Discount scheme.
Concluding, the spokesperson emphasised the long-term strategy: 'The only way to bring down bills for good and get off the fossil fuel rollercoaster is with this government's mission to deliver clean homegrown energy that we control.'
This remains a developing story, and further updates are expected.
