Millions of households across Britain face a significant increase in their energy costs after the regulator approved a massive investment programme to upgrade the nation's ageing energy infrastructure.
Major Investment Approved for Gas and Electricity Networks
The energy regulator, Ofgem, has given the green light to an initial £28 billion of investment to overhaul the UK's gas and electricity networks. This decision is set to directly impact customers of the country's largest suppliers, including British Gas, EDF, E.ON, Ovo, and Octopus.
Ofgem has approved more than £17.8 billion for spending plans to upgrade gas transmission and distribution networks over the five-year period starting in 2026. A further £10.3 billion has been earmarked to rewire the nation's high-voltage electricity network. This marks the most substantial expansion of the grid since the 1960s and represents the first phase of a planned £80 billion upgrade of the entire power grid.
Impact on Household Bills and Political Promises
This vast investment will be funded through levies added to household energy bills. According to Ofgem's own forecasts, the upgrades are expected to add £108 to network charges by 2031. This increase is broken down into £48 to support gas network upgrades and £60 for the electricity grid expansion.
The projected rise of £108 threatens to wipe out almost all of the savings promised by Labour Chancellor Rachel Reeves in her Autumn Budget, dealing a blow to household finances. Ofgem argues that the investment will ultimately save money, claiming it will prevent £80 from being added to bills compared to a scenario where the grid is not expanded. These savings would come from reducing payments to wind farms to shut down when local grids are overloaded.
Jonathan Brearley, Chief Executive of Ofgem, stated: "The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world." He emphasised consumer protections, adding, "Ofgem will hold network companies accountable for delivering on time and on budget… We’ve 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."
Consumer Backlash and Calls for Fairness
The announcement has been met with criticism from consumer groups, who argue that households are being asked to shoulder an unfair burden. Simon Francis, coordinator of the End Fuel Poverty Coalition, welcomed the necessary upgrades but insisted that consumers "can’t keep footing the bill."
He highlighted the substantial profits made by energy firms during the recent crisis, saying, "These firms have already made billions in profits during the energy crisis, with significant returns flowing to offshore investors and so-called ‘vampire funds’. Every penny added to customers’ bills must be spent delivering clear value for money and actively helping to reduce the cost of energy in the long-term and ensure energy security."
Despite the upfront cost, Ofgem states the net annual impact by 2031 will be lower. The regulator calculates that the overall added net costs are equivalent to bills being higher by about £30 a year by 2031, or around £2.50 per month. The debate now centres on whether this long-term investment in energy security and efficiency justifies the immediate financial pressure on already stretched household budgets.
