Energy bills to rise after Ofgem approves £24bn investment

The energy watchdog has given the go-ahead to an initial £24bn of investment to upgrade UK energy infrastructure, but revealed the move will push up network charges on household bills by more than £100.

Ofgem’s draft verdict on price controls for energy network firms approves more than £15bn to be spent on gas transmission and distribution networks in the five years to 2031.

A further £8.9bn is set to be committed to the nation’s high-voltage electricity network, which Ofgem said will power the biggest expansion of the grid since the 1960s, with another £1.3bn being earmarked.

The funding will allow 80 major energy infrastructure projects to be completed by 2030 and comes amid a push by the Government to boost the UK’s renewables sector to help improve energy security.

But Ofgem revealed households are set to see bills surge by £104 by 2031 to cover the cost of the extra investment.

The regulator said this will include £30 for gas networks and £74 for the electricity grid.

The regulator insisted that bills would be even higher – around £30 more – without the investment, because the funding will allow the UK to make “better use of our clean renewable energy so we are not having to pay for expensive gas plants to serve demand”.

“Taken all together the net cost of these investments on bills amounts to around £24 a year – or less than 40p per week – by March 2031,” Ofgem said.

Jonathan Brearley, chief executive of Ofgem, said major investment in the energy networks is vital to “ensure the system has greater resilience against shocks from volatile gas prices we don’t control”.

He said: “Doing nothing is not an option and will cost consumers more – this is critical national infrastructure.

“The sooner we build the network we need and invest to strengthen our resilience, the lower the cost for billpayers will be in the future.

“However, this can’t be done at any price, which is why we have built in cost controls and negotiated a fair deal for both investors and consumers.

“And we won’t hesitate to intervene if network companies don’t deliver on time and on budget.”