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| Energy bills set to rise under Ofgem upgrade plans | Energy bills set to rise under Ofgem upgrade plans |
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| Household energy bills will rise by £11 a year by the start of the next decade, an increase of more than 8% on current costs, under plans unveiled by the industry regulator for upgrading of gas and electricity networks. | Household energy bills will rise by £11 a year by the start of the next decade, an increase of more than 8% on current costs, under plans unveiled by the industry regulator for upgrading of gas and electricity networks. |
| Ofgem said the £22bn programme will see household bills rise by £7 next year, rising to £15 by 2021 – an average rise of £11 over the eight-year period. Distribution costs account for around 20% of a household gas bill, with any large-scale investment programme therefore having a material impact on household bills. | |
| The change equates to an 8.4% increase on the average household dual fuel bill, which is £1,310 according to Ofgem. However, the proposals were slammed by Britain's dominant energy network business, National Grid. In a statement the company said its own plan "differs substantially" from Ofgem's, which argues that National Grid can deliver the improvements at a lower cost. | The change equates to an 8.4% increase on the average household dual fuel bill, which is £1,310 according to Ofgem. However, the proposals were slammed by Britain's dominant energy network business, National Grid. In a statement the company said its own plan "differs substantially" from Ofgem's, which argues that National Grid can deliver the improvements at a lower cost. |
| Lord Mogg, Ofgem's chairman, said the multi-billion pound programme was needed to overhaul existing infrastructure and meet environmental targets, which includes attaching a new generation of offshore wind farms to the energy grid and installing hundreds of kilometres of new power lines above and below the ground. "Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies. This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible," he said. | Lord Mogg, Ofgem's chairman, said the multi-billion pound programme was needed to overhaul existing infrastructure and meet environmental targets, which includes attaching a new generation of offshore wind farms to the energy grid and installing hundreds of kilometres of new power lines above and below the ground. "Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies. This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible," he said. |
| The £22bn programme comprises a £15bn investment in the upgrade and renewal of the high voltage electricity network in England and Wales, as well as high pressure gas networks in the UK, which transfer gas from offshore gasfields to the main network. The investment includes replacing 1,500km of overhead power line and installing 350km of new overhead lines, with a further 264km underground. The remaining £7bn is for the low pressure gas network, which supplies homes and businesses across the UK including all British Gas customers. The plans include connecting 80,000 households to the gas network for the first time. | The £22bn programme comprises a £15bn investment in the upgrade and renewal of the high voltage electricity network in England and Wales, as well as high pressure gas networks in the UK, which transfer gas from offshore gasfields to the main network. The investment includes replacing 1,500km of overhead power line and installing 350km of new overhead lines, with a further 264km underground. The remaining £7bn is for the low pressure gas network, which supplies homes and businesses across the UK including all British Gas customers. The plans include connecting 80,000 households to the gas network for the first time. |
| National Grid criticised the proposals, which fall short of its own estimates for the amount of money that needs to be spent over the remainder of the decade. It wanted to spend £21bn on electricity transmission over the period in order to connect new power plants across England and Wales, with a further £9bn on gas pipelines. Instead, Ofgem has said it can spend up to £22bn in total. . | National Grid criticised the proposals, which fall short of its own estimates for the amount of money that needs to be spent over the remainder of the decade. It wanted to spend £21bn on electricity transmission over the period in order to connect new power plants across England and Wales, with a further £9bn on gas pipelines. Instead, Ofgem has said it can spend up to £22bn in total. . |
| As National Grid shares fell nearly 2% in early trading, the company issued a rebuke of Ofgem's proposals. "We believe that these initial proposals will not appropriately incentivise the essential investments necessary to provide safe, reliable networks for the UK consumer and avoid delays to the achievement of the UK's environmental targets," the company said. | As National Grid shares fell nearly 2% in early trading, the company issued a rebuke of Ofgem's proposals. "We believe that these initial proposals will not appropriately incentivise the essential investments necessary to provide safe, reliable networks for the UK consumer and avoid delays to the achievement of the UK's environmental targets," the company said. |
| "The financing packages proposed do not, on either a standalone basis or in comparison with other regulatory outcomes, adequately reflect the increased scale of investment and implicit risk associated with the major investment required in the coming years to build the energy system that our customers will need in the future, whether in transmission or distribution infrastructure." | "The financing packages proposed do not, on either a standalone basis or in comparison with other regulatory outcomes, adequately reflect the increased scale of investment and implicit risk associated with the major investment required in the coming years to build the energy system that our customers will need in the future, whether in transmission or distribution infrastructure." |