Household Energy Bills Set to Rise as Ofgem Approves £28bn Grid Upgrade
UK household energy bills will increase to help fund a £28bn overhaul of the nation’s electricity and gas networks, regulator Ofgem has confirmed.
The investment forms part of a five year programme to improve reliability and prepare the energy system for future demand. Around £10.3bn will be allocated to strengthening electricity transmission lines, while the majority will support maintenance of gas infrastructure.
Under the plan, an extra £108 will be added to household bills by 2031. Ofgem estimates that once wider benefits are factored in, the real annual increase for consumers will be closer to £30 because upgrades are expected to reduce reliance on imported gas and bring down wholesale prices.
Energy network operators, which control regional power lines, cables and gas pipelines, operate as regulated monopolies separate from energy suppliers. The new framework outlines their obligations and spending controls from next year.
Household Energy Bills
Ofgem chief executive Jonathan Brearley said the upgrade programme will keep the system “among the safest, most secure and resilient in the world.” Speaking to BBC Breakfast, he stressed that the UK must diversify away from gas dependency.
“Gas has a really big part to play in our energy system for some time, but we need to diversify our risk,” he said. “We will be much better at electricity prices in the future and that will protect people’s bills.”
Of the £108 rise, £60 will support electricity infrastructure and £48 gas. Ofgem believes the investment will generate around £80 in savings, including £50 from grid expansion alone.
Mr Brearley said the increase in bills will be gradual. “It will go up over the five years, so it is not all happening at once,” he said. “It is about 2 to 3 percent on bills in April and increases roughly in a straight line from there.”
The regulator also expects upgrades to reduce costly inefficiencies in the system, such as billions in payments to offshore wind farms that must shut down when the grid cannot absorb their output.
Keith Anderson, chief executive of Scottish Power, told BBC Radio 4’s Today programme that addressing constraints in the network was vital. “This will be the biggest wave of investment in our electricity infrastructure since it was built in the 1950s,” he said. “It will give us a system that is fit for purpose for the 21st century.”
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Jon Butterworth, chief executive of National Gas, which operates the gas transmission network, welcomed the funding. He said it recognises the critical role gas infrastructure plays in energy security now and “for decades to come,” adding that the company will review the details to ensure it supports safety, resilience and clean energy objectives.
Environmental groups also urged scrutiny. Greenpeace UK senior climate adviser Charlie Kronick said the current grid is “no longer fit for purpose” but insisted safeguards must ensure value for money. “This money must be spent effectively with strong regulation to protect bill payers,” he said.
The announcement follows the government’s recent Budget pledge to remove certain levies worth around £150 from typical annual energy bills.
