The decision to approve a £28 billion deal for energy companies, which will result in an average increase of nearly £110 per year on customer bills, has sparked criticism towards the regulators.
Ofgem, the industry watchdog, has granted permission for the companies to enhance and invest in their gas and electricity networks over the next five years. This move allows the firms to recover the investment costs from customers, starting with a £40 increase in bills from April, escalating to £108 annually by 2031. However, Ofgem suggests that with anticipated savings from this substantial investment, the actual increase in 2031 may be closer to £30 per customer.
The final deal exceeds Ofgem’s initial proposal by £4 billion, following lobbying efforts from the energy industry. Ofgem argues that this investment will reduce the UK’s dependency on imported energy and ultimately lead to cost savings for households over time.
Citizens Advice has raised concerns over the deal, pointing out that network companies have already made windfall profits of £4 billion in the past four years. Gillian Cooper, the director of energy at Citizens Advice, stated that energy bills are expected to rise by approximately £40 starting in April 2026, with further increases in the future.
Various stakeholders have expressed apprehensions about Ofgem’s decision. Simon Francis, from the End Fuel Poverty Coalition, cautioned that Ofgem might be giving network companies unchecked financial support. He emphasized the need for thorough scrutiny and consumer protection, highlighting the significant profits made by these companies during the current energy crisis.
Greenpeace UK’s senior climate advisor, Charlie Kronick, emphasized the importance of reducing energy costs as the transition to cleaner energy sources progresses. Kronick urged the government to intervene to ensure that energy costs are reasonable and not driven solely by profits.
Dale Vince, the founder of Ecotricity, believes that disconnecting electricity prices from volatile gas prices is crucial to lowering energy bills. He criticized Ofgem’s stance on renewable energy’s impact on prices and highlighted the need to break the cycle of high gas prices influencing electricity costs.
While critics voice their concerns, Andy Prendergast, of the GMB union, sees the investment as a positive step towards energy independence. He welcomed the overdue investment in gas and electricity infrastructure, suggesting that it marks a significant decision by the government.
The substantial investment will focus on upgrading gas transmission and distribution networks with nearly £18 billion allocated, while £10.3 billion will be directed towards enhancing the high-voltage electricity network in the UK.
Households are expected to bear the cost of the extra investment through network charges, which constitute about a fifth of the average annual energy expenses. By 2031, the rise in network charges is projected to reach £108, up from the initial estimate of £104 in July.
Jonathan Brearley, Ofgem’s chief executive, highlighted that the investment will aid the shift to alternative energy sources, support industrial growth, and shield consumers from fluctuating gas prices.
A government spokesperson stressed the necessity of upgrading the country’s energy infrastructure to ensure energy security and reliability.
Dhara Vyas, CEO of Energy UK, emphasized the importance of increasing investment in energy transportation infrastructure to meet future energy demands and ensure safety and reliability.
Despite ongoing reviews and adjustments by Ofgem, the approved investment seeks to fund 80 new energy projects aimed at enhancing the grid’s capacity to accommodate electricity from renewable sources.
Energy companies like Scottish and Southern Electricity Networks and National Grid have welcomed the investment, highlighting its potential to boost energy security, economic growth, and job creation across the UK.
