Regulatory watchdogs faced backlash over their approval of a £28 billion deal with energy corporations, which is set to raise customer bills by nearly £110 annually.
Ofgem, the industry regulator, has sanctioned the investment plans for upgrading electricity and gas networks by companies over the next five years.
Under this agreement, the companies can recover the investment costs from customers, with an initial increase of £40 on bills starting from next April, escalating to £108 per year by 2031. However, these figures do not consider the anticipated cost savings from such significant infrastructure upgrades. Ofgem estimates that factoring in these savings will reduce the 2031 increase to around £30 per customer.
The approved deal exceeds Ofgem’s initial proposal by £4 billion following lobbying efforts by industry stakeholders. Ofgem argued that the investment would lessen the UK’s dependency on imported energy and eventually lead to cost savings for households.
Citizens Advice criticized the latest agreement, pointing out that network companies have already profited by £4 billion in windfall gains over the past four years. The organization’s energy director, Gillian Cooper, stated that energy bills are expected to surge by approximately £40 from April 2026, with further increases in the future.
Various advocacy groups and experts have expressed concerns over the deal, with some warning about the risks of unchecked investment by network and transmission companies using public funds. They emphasized the need for stringent scrutiny and consumer protections to ensure that any bill increases translate into tangible benefits and long-term energy cost reductions.
Despite the criticisms, there are voices supporting the investment, highlighting the necessity of upgrading the gas and electricity infrastructure to enhance energy security and move towards energy independence.
The investment focus will be on enhancing gas transmission and distribution networks with around £18 billion allocated, while another £10.3 billion will be dedicated to strengthening the high-voltage electricity network in the UK.
According to Ofgem’s CEO Jonathan Brearley, this substantial investment is crucial for transitioning to cleaner energy sources, supporting industrial growth, and insulating the country from volatile energy prices.
Overall, the approved investment aims to fund 80 new energy projects, including expanding grid capacity, integrating renewable energy sources, and ensuring a reliable energy supply for the future.
Key players in the energy sector, like Scottish and Southern Electricity Networks and National Grid, have welcomed the investment approval, emphasizing its potential to reduce energy imports, enhance energy security, and drive economic growth.
Amidst differing opinions, the government and industry leaders stress the importance of modernizing energy networks to meet evolving energy demands and ensure a sustainable and reliable energy system for the UK.