Regulators faced backlash following the approval of a £28 billion agreement with energy corporations, leading to an anticipated annual increase of nearly £110 per customer.
Ofgem, the industry watchdog, has given the green signal for energy companies to enhance and modernize their gas and electricity networks over the next five years.
These companies are allowed to recover the investment by incrementally adding charges to customers’ bills, starting with a £40 increase in April and reaching £108 annually by 2031. However, Ofgem projects that after factoring in the anticipated savings from such substantial investments, the actual increase by 2031 will be closer to £30 per customer.
The approved deal surpasses Ofgem’s initial proposal by £4 billion, following intense lobbying efforts from the industry. Ofgem contends that this investment will decrease the UK’s dependency on imported energy and ultimately result in cost savings for households.
Citizens Advice criticized the latest deal, pointing out that network companies have already made substantial windfall profits totaling £4 billion over the past four years. The organization warned that energy bills are projected to rise by approximately £40 starting in April 2026, with further escalations in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned Ofgem against potentially offering unchecked financial support to network and transmission companies. He emphasized the importance of ensuring that such significant public funds are subject to rigorous scrutiny and provide tangible benefits to consumers.
Greenpeace UK’s senior climate advisor, Charlie Kronick, emphasized the necessity for energy costs to decrease as the transition to a cleaner energy system progresses. Kronick suggested that government intervention may be necessary to ensure that the energy system prioritizes the welfare of billpayers over profits.
Dale Vince, the founder of Ecotricity, stressed the need to break the connection between wholesale gas prices and electricity prices to lower energy bills. He criticized Ofgem’s assertion that increased renewable energy generation, supported by the bill hikes, would automatically lead to reduced bills and protection against volatile gas prices.
Andy Prendergast, the national secretary of the GMB union, expressed cautious optimism about the long-overdue investments in the gas and electricity grid, highlighting the potential benefits in moving towards energy independence.
The investments will focus on upgrading power lines, cables, and gas pipes rather than energy suppliers, with the majority of the £28 billion allocated to enhancing gas transmission and distribution networks and strengthening the high-voltage electricity network in the UK.
Households are expected to witness a £108 increase in network charges by 2031, covering the costs of the additional investments, up from the £104 rise projected in the preliminary verdict in July.
Jonathan Brearley, Ofgem’s chief executive, highlighted that the investment will facilitate the transition to new energy sources, supporting industrial growth and insulating against fluctuating gas prices.
A government spokesperson emphasized the necessity of upgrading the gas and electricity networks after years of inadequate investment to ensure energy security for the nation.
Dhara Vyas, chief executive of Energy UK, underscored the importance of increasing infrastructure investment to maintain the safety, reliability, and capacity of the energy networks to meet future energy demands.
Ofgem has reviewed energy companies’ proposals throughout the year, reducing the initial £33 billion plans by over £4.5 billion. However, following pressure from network firms, the approved investment amount was increased from the July draft to accommodate additional electricity transmission developments and infrastructure improvements.
Ofgem highlighted that the investment will support 80 new power projects, including enhancing the grid’s capacity through new technologies to manage electricity flow from renewable sources.
Scottish and Southern Electricity Networks, a subsidiary of SSE, emphasized that the investment will enhance energy security, reduce reliance on imported energy, and stimulate economic growth and job creation across the UK.
National Grid, responsible for managing much of Britain’s electricity grid, welcomed Ofgem’s recognition of the need for substantial investment in the electricity transmission sector and pledged to assess the approved package for its feasibility and effectiveness.
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