Regulators faced backlash following the approval of a £28 billion agreement with energy corporations, resulting in an anticipated £110 annual increase in customer bills.
Ofgem, the industry watchdog, has authorized companies to enhance and invest in their electricity and gas networks over the next five years.
These firms will be able to recover the investment costs from customers, with an initial £40 increase in bills starting in April and escalating to £108 annually by 2031. Nonetheless, this projection does not factor in the anticipated savings from such substantial investments. Ofgem estimates that considering these savings, the actual increase in 2031 will be closer to £30 per customer.
The approved deal exceeds Ofgem’s earlier proposal by £4 billion, following lobbying efforts from industry players. Ofgem argued that the investment would reduce the UK’s dependency on imported energy and eventually result in cost savings for households.
Citizens Advice criticized the latest agreement, citing that network companies had already gained £4 billion in excess profits over the past four years. Gillian Cooper, the energy director at Citizens Advice, remarked that energy bills were set to rise by approximately £40 starting in April 2026, with further increases expected in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned Ofgem against potentially granting excessive freedom to network and transmission companies. He emphasized the need for rigorous scrutiny and consumer protections, expressing concerns over the massive profits made by these firms during the energy crisis.
Greenpeace UK’s senior climate advisor, Charlie Kronick, emphasized the importance of lowering energy costs for households and businesses as the transition to cleaner energy unfolds. Kronick called for government intervention to ensure that the energy system benefits consumers rather than prioritizing profits.
Dale Vince, the founder of Ecotricity, advocated for decoupling wholesale gas prices from electricity prices as a key strategy to reduce energy bills. Vince criticized Ofgem’s stance on renewable energy, arguing that without breaking the pricing link, consumers would remain vulnerable to global gas price fluctuations.
Andy Prendergast, the national secretary of the GMB union, welcomed the overdue investments in the gas and electricity grid, highlighting the potential benefits for energy independence and applauding the government’s decisive actions in this regard.
The planned investments will focus on upgrading power lines, cables, and gas pipes, rather than on energy suppliers. Of the total £28 billion, nearly £18 billion will be allocated to gas transmission and distribution networks, while around £10.3 billion will be dedicated to enhancing the country’s high-voltage electricity infrastructure.
Households can expect an increase of £108 in network charges by 2031, covering the additional investment costs, up from the initial estimate of a £104 rise in July.
Jonathan Brearley, Ofgem’s chief executive, emphasized that the investment would facilitate the transition to new energy sources, support industrial growth, and shield consumers from volatile gas prices.
A spokesperson for the government underscored the necessity of upgrading the 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 investments to uphold the safety, reliability, and capacity of the energy networks in anticipation of future energy demands.
Ofgem has scrutinized the proposals from energy firms throughout the year, resulting in reductions of over £4.5 billion from the initial £33 billion plans. The revised investment amount reflects adjustments made in response to demands from network companies seeking additional funding for electricity transmission projects and infrastructure upgrades.
Ofgem outlined that the investment would support 80 new power projects, including initiatives to enhance the grid’s capacity through the integration of new technologies and infrastructure to accommodate the growing electricity output from renewable sources.
Scottish and Southern Electricity Networks, a subsidiary of SSE, emphasized that the investment would enhance energy security, reduce reliance on imported energy, and stimulate economic growth and job creation across the UK.
National Grid, responsible for managing a significant portion of the UK’s electricity grid, welcomed Ofgem’s acknowledgment of the substantial investment required in the electricity transmission sector and pledged to assess the approved package’s effectiveness and viability.
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