Concerns arose as watchdogs drew criticism for finalizing a £28 billion agreement with energy giants, leading to an anticipated rise of nearly £110 annually in customer bills.
The industry regulator, Ofgem, has approved the companies’ plans to enhance and invest in their gas and electricity networks over the next five years.
Under the deal, the firms are allowed to recover the investment costs from customers, with an initial £40 increase in bills starting in April and escalating to £108 per year by 2031. Ofgem estimates that after factoring in anticipated savings from such significant investments, the actual increase in 2031 per customer would be closer to £30.
The agreed amount is £4 billion higher than Ofgem’s earlier proposal this year, following lobbying efforts by the industry. Ofgem asserted that the investment would reduce the UK’s dependence on imported energy and eventually save households money.
Citizens Advice criticized the recent deal, pointing out that network companies had already reaped £4 billion in excess profits over the past four years. Gillian Cooper, the energy director at Citizens Advice, warned of an impending £40 increase in energy bills from April 2026, with further hikes expected in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned that Ofgem could be granting unchecked financial liberty to network and transmission companies. Francis emphasized the need for rigorous scrutiny and consumer protections concerning the substantial public funds involved.
Greenpeace UK’s senior climate advisor, Charlie Kronick, stressed the necessity for energy costs to decrease as the transition to cleaner energy systems progresses. Kronick urged government intervention to ensure that the energy system prioritizes the interests of billpayers over profits.
Dale Vince, the founder of Ecotricity, advocated for breaking the connection between wholesale gas prices and electricity prices as a solution to lowering energy costs. Vince criticized Ofgem’s assertion that increasing renewable energy through supported bill hikes would lead to lower bills or insulation from volatile gas prices.
Andy Prendergast, the national secretary of the GMB union, welcomed the overdue investment in gas and electricity grids, emphasizing the importance of moving towards energy independence.
The investment primarily targets companies owning power lines, cables, and gas pipes, rather than energy suppliers. Of the total £28 billion, approximately £18 billion will be allocated to gas transmission and distribution networks, with an additional £10.3 billion earmarked for enhancing the high-voltage electricity network in the UK.
Households are expected to witness a rise in network charges on bills, accounting for about a fifth of average annual energy costs, with an estimated £108 increase by 2031 to accommodate the additional investment, up from the £104 rise projected in the initial draft verdict in July.
Jonathan Brearley, the chief executive of Ofgem, highlighted that the investment aims to facilitate the shift to new energy forms, support industrial growth, and provide insulation against volatile gas prices.
A government spokesperson emphasized the necessity of upgrading gas and electricity networks after years of insufficient investment to ensure energy security and uninterrupted supply.
Dhara Vyas, the chief executive of Energy UK, underscored the importance of increasing infrastructure investment to maintain safe, secure, and reliable energy networks capable of meeting future energy demands.
Ofgem has been scrutinizing energy companies’ proposals since the beginning of the year, resulting in reductions exceeding £4.5 billion compared to the initial £33 billion plans submitted. The approved investment will support 80 new power projects, including enhancing grid capacity and accommodating electricity flow from renewable sources.
Scottish and Southern Electricity Networks, owned by SSE, expressed that the investment would enhance energy independence, remove grid constraints, bolster energy security, and stimulate economic growth and job creation across the UK.
National Grid, a major operator of Britain’s electricity grid, welcomed Ofgem’s acknowledgment of the necessity for substantial investment in the electricity transmission sector and pledged to assess the approved package’s viability and effectiveness.
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