Regulators faced backlash following the approval of a £28 billion agreement with energy corporations, resulting in an anticipated annual increase of nearly £110 per customer.
Ofgem, the regulatory body for the industry, has sanctioned the enhancement and investment in electricity and gas networks by companies over the upcoming five years.
These companies are permitted to recover the investment costs from customers, starting with a £40 rise in bills in April next year, escalating to £108 annually by 2031. However, these figures do not consider the anticipated cost savings resulting from such extensive investments. Ofgem projects that with those savings factored in, the actual increase for customers in 2031 will be closer to £30 each.
The agreed upon sum is £4 billion higher than Ofgem’s initial proposal earlier this year, following lobbying efforts from the industry. Ofgem argued that this investment would diminish the UK’s dependence on imported energy and eventually lead to cost savings for households.
Citizens Advice criticized the latest deal, pointing out that network companies had already amassed £4 billion in excess profits over the past four years. Gillian Cooper, the energy director at Citizens Advice, stated that energy bills are expected to surge by approximately £40 starting in April 2026, with further increases in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned that Ofgem is potentially granting unchecked funding to network and transmission companies. He emphasized the necessity for rigorous scrutiny and consumer protections for such substantial amounts of public funds.
Greenpeace UK’s senior climate advisor, Charlie Kronick, stressed the burden of energy costs on households and businesses, advocating for eventual price reductions as the energy system transitions to cleaner sources. Kronick called on the government to intervene to ensure that the energy system prioritizes consumers over profits.
Dale Vince, the founder of Ecotricity, asserted that breaking the connection between wholesale gas prices and electricity prices is crucial to reducing energy bills. Vince criticized Ofgem’s belief that increasing renewable energy through the supported bill hikes would lead to lower bills or protection from volatile gas prices. He highlighted the need to sever the tie to global gas prices to establish a sustainable energy pricing model.
Andy Prendergast, the national secretary of the GMB union, expressed cautious optimism towards the investment in gas and electricity grids, emphasizing the significance of moving towards energy independence through necessary infrastructure upgrades.
The investment primarily targets companies responsible for power lines, cables, and gas pipelines, rather than energy suppliers. Out of the total £28 billion, around £18 billion will be allocated to enhancing gas transmission and distribution networks, with an additional £10.3 billion designated for strengthening the high-voltage electricity grid in the UK.
Consumers can anticipate a rise of £108 in network charges on their bills by 2031, covering the costs of the additional investments, up from the £104 increase estimated in the preliminary verdict released in July.
Jonathan Brearley, the chief executive of Ofgem, highlighted that the investment aims to facilitate the shift towards new energy forms, supporting industrial growth and safeguarding against fluctuating gas prices.
A government spokesperson underscored the necessity of upgrading gas and electricity networks after years of neglect to ensure energy security for the nation.
Dhara Vyas, the chief executive of Energy UK, emphasized the importance of expanding infrastructure to maintain reliable energy networks capable of meeting future energy demands. Vyas stressed the need for modernization to accommodate the growing electrification of homes, businesses, and transport systems.
Ofgem has been scrutinizing energy companies’ proposals since the beginning of the year, resulting in reductions of over £4.5 billion compared to the initial £33 billion plans submitted. Despite the cuts, the amount approved in July was increased following pressure from network firms to address additional electricity transmission requirements and infrastructure maintenance.
Ofgem highlighted that the investment will facilitate 80 new power projects, including expanding grid capacity through new technologies and infrastructure to handle electricity from renewable sources.
Scottish and Southern Electricity Networks, owned by SSE, emphasized that the investment would reduce reliance on foreign energy sources, enhance energy security, and stimulate economic growth and job creation across the UK.
National Grid, the operator of a significant portion of Britain’s electricity grid, welcomed Ofgem’s recognition of the essential investment required in