Regulators faced backlash following the approval of a £28 billion agreement with energy corporations that will result in an annual increase of nearly £110 per customer.
Ofgem, the industry watchdog, has granted permission for companies to enhance and invest in their gas and electricity networks over the next five years.
These firms are allowed to recover the investment by adding £40 to bills starting in April next year, escalating to £108 per year by 2031. Nevertheless, this amount does not factor in the anticipated savings from such significant investments. Ofgem estimates that, when considering these savings, the actual increase per customer in 2031 will be closer to £30.
The approved deal surpasses Ofgem’s initial proposal by £4 billion after lobbying from the industry. Ofgem asserted that this investment would decrease the UK’s dependency on imported energy and eventually lead to cost savings for households.
Citizens Advice criticized the latest agreement, pointing out that network companies have already reaped £4 billion in additional profits over the past four years. Gillian Cooper, the energy director at Citizens Advice, expressed concerns over the forthcoming rise in energy bills, with an approximate £40 increase from April 2026 and further hikes in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned that Ofgem is at risk of granting excessive freedom to network and transmission companies. He emphasized the need for thorough scrutiny and consumer protections given the large sums of public money involved.
Greenpeace UK’s senior climate advisor, Charlie Kronick, emphasized the importance of reducing energy costs as the nation transitions to cleaner energy sources. He called for government intervention to ensure that the energy system prioritizes the welfare of billpayers over profits.
Dale Vince, the founder of Ecotricity, suggested breaking the connection between wholesale gas prices and electricity costs as a key strategy to lower energy bills. He criticized Ofgem’s assertion that increased renewable energy integration would lead to lower bills, highlighting the need to address the influence of global gas prices on domestic energy costs.
Andy Prendergast, the national secretary of the GMB union, welcomed the overdue investment in gas and electricity infrastructure, emphasizing its potential to enhance energy independence and applauding the government for making decisive choices in this regard.
The investment will predominantly focus on enhancing gas transmission and distribution networks with nearly £18 billion allocated, alongside £10.3 billion for strengthening the high-voltage electricity network in the UK.
Households can expect a rise of £108 in network charges by 2031, representing approximately a fifth of the average annual energy costs, to cover the expenses of the additional infrastructure investments, up from the initial £104 estimate in July.
Jonathan Brearley, Ofgem’s chief executive, highlighted that this investment will facilitate the transition to new energy forms, support industrial growth, and shield consumers from volatile 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, stressed the significance of increasing infrastructure investment to maintain the safety, reliability, and capacity of energy networks as the country faces growing energy demands.
Ofgem has scrutinized energy companies’ proposals throughout the year, resulting in reductions of over £4.5 billion compared to the initial £33 billion plans submitted. However, the approved amount was raised from the July draft following demands from network firms to accommodate additional electricity transmission developments and infrastructure requirements.
The investment will support around 80 new power projects aimed at enhancing the grid’s capacity to accommodate electricity from renewable sources through new technologies and infrastructure.
Scottish and Southern Electricity Networks emphasized that the investment will reduce reliance on imported energy, strengthen energy security, and stimulate economic growth and job opportunities across the UK.
National Grid welcomed Ofgem’s acknowledgement of the need for significant electricity transmission sector investments and pledged to evaluate the approved package’s viability and effectiveness.