Industry watchdogs have come under fire for approving a £28 billion agreement with energy companies that will result in an annual increase of nearly £110 on customer bills.
The regulatory body Ofgem has authorized the firms to enhance and invest in their gas and electricity networks over the next five years.
These companies will be able to recover the costs from customers, starting with a £40 increase in bills in April, escalating to £108 per year by 2031. Ofgem estimates that, factoring in the anticipated savings from such substantial investments, the actual increase in 2031 will be closer to £30 per customer.
The approved deal surpasses Ofgem’s earlier proposal by £4 billion following lobbying efforts from the industry. Ofgem argues that the investment will decrease the UK’s dependence on imported energy and eventually lead to savings for households.
Citizens Advice has criticized the recent agreement, citing that network companies have already profited £4 billion excessively in windfall gains over the past four years. The organization’s energy director, Gillian Cooper, stated that energy bills will climb by approximately £40 starting in April 2026, with further rises expected in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned that Ofgem is risking overcommitting funds to network and transmission companies without adequate oversight to protect consumers. He emphasized the need for every additional charge on customers’ bills to offer clear value and actively contribute to long-term energy cost reduction and security.
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 systems progresses. Kronick urged the government to intervene to ensure that the energy system benefits consumers rather than prioritizing profits.
Dale Vince, the founder of Ecotricity, highlighted the necessity of severing the connection between wholesale gas prices and electricity costs to alleviate the burden on consumers. Vince criticized Ofgem’s stance that increased renewable energy integration, supported by the bill hikes, would lead to lower bills or insulation from volatile gas prices.
Andy Prendergast, the national secretary of the GMB union, expressed cautious optimism about the overdue investment in gas and electricity grids, emphasizing the potential for enhanced energy independence and applauding the government’s decisive action in addressing long-standing infrastructure challenges.
The planned investment primarily targets companies responsible for power lines, cables, and gas pipelines rather than energy suppliers. Nearly £18 billion of the total £28 billion will be allocated to gas transmission and distribution networks, with an additional £10.3 billion earmarked for strengthening the UK’s high-voltage electricity network.
Households can expect a rise of £108 by 2031 in network charges on their bills, constituting about a fifth of average annual energy expenses, up from the initial £104 projection from July.
Jonathan Brearley, Ofgem’s chief executive, emphasized that the investment will facilitate the transition to new energy sources, support industrial growth, and shield consumers from volatile gas prices.
A government representative underscored the critical need to upgrade the energy infrastructure after years of neglect to ensure energy security for the country.
Dhara Vyas, chief executive of Energy UK, stressed the importance of bolstering the energy transport infrastructure to maintain safety, reliability, and capacity amidst evolving energy demands. Vyas highlighted the necessity for modernization to accommodate the increasing electrification of homes, businesses, and transport systems.
Ofgem has been scrutinizing energy companies’ proposals since the beginning of the year, making adjustments of over £4.5 billion compared to the initial £33 billion plans. The revised amount in the latest approval reflects input from network firms advocating for additional investments to support electricity transmission and infrastructure development.
Ofgem highlighted that the investment will support 80 new power projects, including expanding the grid’s capacity with new technologies to accommodate electricity from renewable sources.
Scottish and Southern Electricity Networks, owned by SSE, emphasized that the investment will reduce reliance on imported energy, enhance energy security, and stimulate economic growth across the UK.
National Grid, responsible for a significant portion of Britain’s electricity grid, welcomed Ofgem’s recognition of the necessity for substantial investments in the electricity transmission sector and pledged to assess the approved package for its viability and effectiveness.