The decision to approve a £28 billion deal for energy companies, criticized by watchdogs, is set to raise customer bills by almost £110 annually. Ofgem, the industry regulator, has granted permission for firms to enhance and invest in their gas and electricity networks over the next five years.
Starting with a £40 increase in bills next April, the companies will gradually raise charges to £108 per year by 2031. Ofgem estimates that, accounting for anticipated savings from the investments, the actual increase in 2031 per customer will be closer to £30.
The deal surpasses Ofgem’s initial proposal by £4 billion following industry lobbying. Ofgem argues that the investment will decrease the UK’s dependence on imported energy and ultimately save households money.
Citizens Advice has raised concerns over network companies profiting £4 billion in windfall profits over the past four years. The director of energy, Gillian Cooper, stated that energy bills are expected to rise by approximately £40 starting from April 2026, with further increases expected in the future.
Simon Francis, coordinator of the End Fuel Poverty Coalition, cautioned Ofgem about potentially giving a blank check to network and transmission firms. He emphasized the need for proper scrutiny and consumer guarantees regarding the significant public funds involved.
Greenpeace UK’s senior climate advisor, Charlie Kronick, highlighted the burden of energy costs on households and businesses, urging the government to intervene to ensure fair energy pricing for consumers.
Dale Vince, founder of Ecotricity, emphasized the importance of breaking the connection between wholesale gas prices and electricity prices to reduce energy bills. He criticized Ofgem’s stance on renewable energy’s impact on bill reductions and emphasized the need to detach from global gas price fluctuations.
Andy Prendergast, national secretary of the GMB union, expressed cautious optimism about the overdue investment in gas and electricity infrastructure, emphasizing the importance of moving towards energy independence.
The investment focus will be on upgrading power lines, cables, and gas pipes, with nearly £18 billion designated for gas networks and about £10.3 billion for enhancing the high-voltage electricity grid in the UK.
Households can expect a rise of £108 in network charges by 2031 to accommodate the increased investment costs, exceeding the £104 rise estimated in the draft verdict from July.
Jonathan Brearley, Ofgem’s chief executive, emphasized that the investment will facilitate the transition to new energy forms, support industrial growth, and protect against volatile gas prices.
A government spokesperson stressed the necessity of upgrading the energy networks to ensure energy security and reliability after years of underinvestment.
Dhara Vyas, chief executive of Energy UK, underscored the importance of increased infrastructure investment for maintaining energy network safety and reliability to meet future energy demands.
Ofgem has revised energy companies’ proposals throughout the year, reducing the total investment by over £4.5 billion compared to the initial £33 billion plans. The increased investment amount in July followed pressure from network firms to account for additional electricity transmission projects and infrastructure health.
Ofgem highlighted that the investment will fund 80 new power projects aimed at enhancing the grid’s capacity for electricity generated from renewable sources.
Scottish and Southern Electricity Networks emphasized the investment’s role in reducing energy imports, improving energy security, and stimulating economic growth across the UK.
National Grid welcomed Ofgem’s recognition of the need for substantial investment in the electricity transmission sector and pledged to assess the approved package’s feasibility and effectiveness.
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