Households face higher energy bills as £28bn grid upgrade gets go-ahead | Energy bills

Energy companies have been given the green light to spend £28bn on Britain’s gas and electricity networks, raising fears that household bills will rise.

Energy watchdog Ofgem has approved plans to spend more than £17.8bn on improving gas transmission and distribution networks over five years from 2026.

A further £10.3bn will be used to rewire the country’s high-voltage power grid; This is the biggest expansion of the grid since the 1960s and the first phase of a planned £80bn upgrade to the electricity grid.

The multi-billion pound plans are higher than the £24bn budget the regulator proposed in the summer.

The plans will fund more than 80 projects, including new high voltage power cables and upgrades to existing overhead cables, ahead of the government’s plan to become a green energy superpower by the end of the decade.

The investments, which will be financed by taxes on household energy bills, are expected to add £108 to network charges by 2031, according to Ofgem; of this, £48 will support improvements to the gas network and £60 will be invested in the electricity grid.

Ofgem said the investment would save £80 on bills compared to not expanding the grid, as savings would be made by cutting money spent on shutting down wind farms when the local grid is overloaded with electricity.

Overall, the added net costs are “equivalent to bills rising by around £30 per year, or £2.50 per month, by 2031”.

Jonathan Brearley, Ofgem’s chief executive, said: “The funding announced today will keep the UK’s energy network among the safest, most secure and most resilient in the world.

“Ofgem will hold network companies accountable for delivering on time and on budget… We have 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.”