British households will see their energy bills increase by an additional £108 per year by 2031, after the energy regulator gave the green light to a massive spending boost for the nation's power and gas networks.
Major Investment for a Modern Grid
The energy watchdog, Ofgem, has sanctioned a total investment programme of £28 billion to upgrade the UK's ageing energy infrastructure. This figure is up from the £24 billion initially proposed earlier in the year. The funding decision forms the core of the regulator's final ruling on the price controls that will govern energy network companies for the next five years.
Ofgem stated this substantial investment is essential to modernise the system, strengthen its resilience against outages, and ensure it can cope with rising future demand, particularly from electric vehicles and heat pumps.
Breaking Down the Bill Impact
The regulator confirmed that the increased investment will push household energy costs higher than first forecast. The charges related to running the networks, which make up roughly a fifth of a typical annual bill, will rise by £108 per household by 2031.
This marks a slight increase from the £104 rise projected in Ofgem's draft plans last July. The increase breaks down as £48 for gas networks and £60 for the electricity grid.
Offsetting Costs with Future Savings
However, Ofgem argues this investment will also generate significant savings. The regulator claims the upgrades will create 'savings of around £80 per household compared with not expanding the grid at all'.
Specifically, electricity grid upgrades alone are expected to reduce bills by about £50 per household by 2031, helping to offset the new charges. When all costs and projected savings are combined, the net increase to annual bills by 2031 is expected to be about £30.
Ofgem emphasised this equates to less than £3 per month for an average household and is expected to fall further over time as more efficient, clean energy infrastructure delivers longer-term savings.
Regulator's Pledge on Value for Money
Announcing the final plan, Ofgem's chief executive, Jonathan Brearley, said: “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. But this is not investment at any price. Every pound must deliver value for consumers.”
He added that Ofgem would hold network companies strictly accountable for delivering projects on time and on budget, with strong consumer protections built into contracts. Funds will only be released when needed and can be clawed back if not used appropriately.
“Households and businesses must get value for money, and we will ensure they do,” Brearley concluded.
