Household energy bills will rise to help fund a £28bn investment in the UK’s energy network.
Energy regulator Ofgem has approved the funding in a five-year plan to improve electricity and gas grids. The money will go towards maintaining gas networks and strengthening the electricity transmission network.
The work is estimated to add £108 to energy bills by 2031.
But Ofgem said people would end up saving about £80 more than they otherwise would, as the investment will help lower the reliance on imported gas and make wholesale energy cheaper, leading to a net energy bill rise of about £30 a year.
Companies that run energy networks – including power lines, cables and gas pipes – are separate from suppliers.
This plan sets the framework for how they deliver a safe and secure supply, and the cost controls they face for five years, from next year.
Ofgem chief executive Jonathan Brearley said the investment “will keep Britain’s energy network among the safest, most secure and resilient in the world”.
Speaking to BBC’s Breakfast programme, Mr Brearley said the UK needed to move away from its dependence on gas.
“Gas has a really big part to play in our energy system for some time but we need to diversify our risk,” he said.
Diversifying risk means “we’ll be much better at electricity prices in the future and that will protect people’s bills”.
Of the £108 Ofgem says will be added to energy bills, £48 will be for gas and £60 for electricity.
But the regulator said the investment would deliver about £80-worth of savings, including £50 in savings alone from the energy grid expansion.
Mr Brearley said the £108 added to bills by 2031 “will go up over the five years, so it’s not all happening at once”.
“It’s about 2-3% on bills in April and increases roughly in a straight line from there.”
A Department for Energy Security and Net Zero spokesperson said: “Upgrading our gas and electricity networks after years of underinvestment is essential to keep the lights on and ensure energy security for our country.”
Energy bills remain relatively high, and are set to rise slightly in January after Ofgem separately announced a small increase to its price cap, which will increase a typical household’s bill by £3 a year.
Ofgem’s investment announcement also comes after a government pledge in the Budget to remove certain costs, which will cut about £150 from a typical annual energy bill.
