UK households face £108 energy bill increase to pay for new infrastructure
Ofgem has approved a £28-billion investment in upgrading Britain’s energy grid, which will add £108 to energy bills by 2031.
The energy regulator gave energy network companies the green light to go ahead with a large-scale maintenance and upgrade programme to future-proof infrastructure across Britain, with £17.8 billion going towards maintaining gas networks and £10.3 billion to be used to improve and expand the electricity transmission network.
The costs of this increased investment in energy grid infrastructure will quickly filter through to households across the country. Ofgem said it expects the costs of ongoing operations, asset replacement, and maintenance filters to add £108 to energy bills by 2031.
Of this amount, £48 will be added to gas bills and £60 to electricity bills. The regulator noted, however, that the cost of not upgrading the network is higher.
If it were not to invest in building new infrastructure and improving grid reliability, Ofgem said that energy bills would rise by a further £80 for UK households.
It expects that by expanding the electricity grid the UK can rely less on imported gas, and through improving transmission it can enhance the reliability of the network and its capacity.
Ofgem expects that the overall net increase in UK household energy bills to cover all costs by 2031 will be around £30 per year, or less than £3 per month, adding that it expects costs expected to fall further over time.
The regulator’s approach is that while investing in infrastructure upgrades adds to energy bills, it is much cheaper to do so now than later, and improved efficiency from electricity grid upgrades more than pays for itself over time.
“The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices,” said Ofgem CEO Jonathan Brearley.
“But this is not investment at any price. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we’re setting as the industry scales up investment.”
“We’ve built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do,” Brearley said.
