Recent scrutiny has been directed at watchdogs who approved a £28 billion deal involving energy giants, potentially leading to an annual increase of nearly £110 for customers. Ofgem, the industry regulator, has given the green light for companies to enhance and invest in their electricity and gas networks over the next five years.
As part of the deal, these companies can recover the investment costs by incrementally adding charges to customer bills, starting with £40 in April of the following year and gradually increasing to £108 annually by 2031. However, Ofgem estimates that considering the anticipated savings from such significant investments, the actual increase in 2031 per customer will be closer to £30.
This deal surpasses Ofgem’s initial proposal by £4 billion, following lobbying efforts from the industry. Ofgem argues that this investment will decrease the UK’s dependence on imported energy and eventually result in savings for households.
Citizens Advice raised concerns about network companies accumulating £4 billion in windfall profits over the past four years. Gillian Cooper, the director of energy at Citizens Advice, stated that energy bills are expected to rise by approximately £40 starting in April 2026, with further increases projected in the future.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, cautioned Ofgem against potentially providing unchecked financial support to network and transmission companies. He emphasized the need for proper scrutiny and consumer protections, especially since these companies have reported substantial profits, benefiting offshore investors.
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. He suggested government intervention to prioritize the interests of energy consumers over profits.
Founder of Ecotricity, Dale Vince, highlighted the necessity to disconnect wholesale gas prices from electricity costs in order to reduce energy bills. He criticized Ofgem’s approach, suggesting that increasing renewable energy sources on the grid, supported by the bill hikes, may not necessarily lead to lower costs or insulation from volatile gas prices.
Andy Prendergast, national secretary of the GMB union, expressed cautious optimism about the investment in gas and electricity grids, emphasizing the importance of moving towards energy independence and acknowledging the overdue necessity of such infrastructure upgrades.
The investment will primarily focus on companies that own power lines, cables, and gas pipes, rather than suppliers. Approximately £18 billion will be allocated to gas transmission and distribution networks, with an additional £10.3 billion earmarked to strengthen the UK’s high-voltage electricity network.
Households can expect a rise of £108 by 2031 in network charges on their bills, accounting for about a fifth of their average annual energy costs. Ofgem’s chief executive, Jonathan Brearley, emphasized that this investment is crucial for transitioning to new energy forms and supporting economic growth while mitigating the impact of volatile gas prices.
A government spokesperson highlighted the necessity of upgrading gas and electricity networks after years of neglect to ensure energy security for the country. Dhara Vyas, chief executive of Energy UK, stressed the importance of increasing infrastructure investments to meet the evolving demands of the energy system.
Ofgem’s review of energy company plans resulted in reductions exceeding £4.5 billion compared to the initial £33 billion proposals. The investment is expected to fund 80 new power projects, enhancing the grid’s capacity to accommodate electricity from renewable sources.
Various energy companies, including Scottish and Southern Electricity Networks and National Grid, expressed support for Ofgem’s decision, emphasizing the benefits of the investment in reducing energy reliance, enhancing security, and driving economic growth across the UK.