Household energy bills in the United kingdom are set to rise to help finance a £28 billion investment in the country’s electricity and gas networks.
Energy regulator Ofgem has approved the funding as part of its five-year plan to enhance and maintain the nation’s energy infrastructure.
The investment will focus on sustaining gas networks and strengthening electricity transmission.
The work is projected to add £108 to energy bills by 2031.
However, Ofgem noted that consumers would save roughly £80 compared with what they would otherwise pay, as the investment is expected to reduce reliance on imported gas and make wholesale energy cheaper.
This results in a net increase of about £30 per household.
Energy network companies, which manage power lines, cables, and gas pipes, operate separately from energy suppliers and hold regional monopolies.
The plan sets out the framework for how these companies will ensure safe, secure supply while adhering to cost controls over the next five years.
Ofgem chief executive Jonathan Brearley said the investment “will keep Britain’s energy network among the safest, most secure and resilient in the world.” Speaking on BBC’s Breakfast programme, he added that the UK needed to reduce its dependence on gas.
“Gas has a really big part to play in our energy system for some time but we need to diversify our risk,” he said. Diversifying risk, he explained, means “we’ll be much better at electricity prices in the future and that will protect people’s bills.”
Of the £108 added to bills, £48 will cover gas costs and £60 electricity. Ofgem said the investment will deliver around £80 in savings, with £50 coming directly from the energy grid expansion.
Mr Brearley clarified that the £108 increase will be gradual over the next five years: “It’s about 2-3% on bills in April and increases roughly in a straight line from there.”
The regulator also highlighted that the investment will eliminate inefficiencies, such as offshore wind farms being paid billions annually to switch off because the grid cannot absorb their power.
Keith Anderson, Scottish Power’s chief executive, told BBC’s Today programme that addressing these constraints is vital.
“This will be the biggest wave of investment in our electricity infrastructure since it was built by our grandfathers back in the 1950s and it will give us a system that is fit for purpose for the country for the 21st Century,” he said.
National Gas, which owns and operates the UK’s gas transmission network, will receive funding under the plan.
Its CEO Jon Butterworth welcomed the investment, noting it confirmed “the critical role that the gas transmission system plays in Britain’s energy security now and for decades to come.”
“In the coming weeks, we will undertake a more detailed review of Ofgem’s decision to ensure it enables us to deliver a safe, resilient network that secures Britain’s energy, maintains our industrial competitiveness and supports the country’s clean energy ambitions,” he added.
Charlie Kronick, Greenpeace UK’s senior climate adviser, said the UK’s energy grid was “no longer fit for purpose” and required urgent upgrades.
“This money must be spent effectively, however, with robust safeguards and strong regulation to protect bill-payers, and ensure these upgrades deliver genuine value for money, offering fair but not excessive returns,” he said.
Ofgem’s announcement follows a government pledge in the Budget to remove certain costs, which could save households around £150 a year on their energy bills.
