Ofgem has approved an initial £24 billion investment programme to upgrade the UK’s gas and electricity infrastructure, a move that will increase household energy bills by £104 by 2031.
Britain’s energy regulator’s draft verdict will see network charges within household bills rise by £24 annually from April 2026.
The investment represents a fourfold increase on current spending levels and will fund 80 major energy infrastructure projects by 2030.
The programme aims to prepare the UK’s energy networks for the expansion of renewable and nuclear power needed to meet net zero targets whilst maintaining energy security.
The proposals remain subject to consultation before a final determination by year’s end.
Ofgem said the electricity grid investment would power the biggest expansion since the 1960s
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The £24 billion funding package includes more than £15 billion for gas transmission and distribution networks over the five-year period to 2031.
A further £8.9 billion has been earmarked for the nation’s high-voltage electricity network, with an additional £1.3 billion also set aside.
Ofgem said the electricity grid investment would power the biggest expansion since the 1960s. The regulator revealed households are set to see bills surge by £104 by 2031 to cover the cost of the extra investment.
The regulator said this will include £30 for gas networks and £74 for the electricity grid.
The watchdog insisted bills would be approximately £30 higher without the investment, as the funding would enable Britain to make “better use of our clean renewable energy so we are not having to pay for expensive gas plants to serve demand”.
Ofgem chief executive Jonathan Brearley defended the investment, stating that major upgrades to energy networks are vital to “ensure the system has greater resilience against shocks from volatile gas prices we don’t control”.
He said: “Doing nothing is not an option and will cost consumers more – this is critical national infrastructure.
“The sooner we build the network we need and invest to strengthen our resilience, the lower the cost for billpayers will be in the future.”
He emphasised that safeguards were in place, adding: “However, this can’t be done at any price, which is why we have built in cost controls and negotiated a fair deal for both investors and consumers. And we won’t hesitate to intervene if network companies don’t deliver on time and on budget.”
Gillian Cooper, Director of Energy at Citizens Advice, said: “News of bill increases from next April will worry many already struggling with sky-high energy costs.
“More investment in the country’s energy infrastructure is needed to improve access to cheaper renewable energy; reduce our reliance on volatile gas prices; and ultimately bring down people’s bills.
“When setting how much companies can make for this investment, Ofgem must get the best possible deal for billpayers by ensuring company profits don’t end up too high. And to cushion the blow of any short-term bill rises, the government must increase the targeted support it provides to those struggling most with energy costs, like families with children and disabled people.”
The regulator continues to recommend consumers shop around for fixed-rate deals that may offer savings compared to the price cap
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The announcement comes as 22 million British households on the energy price cap benefit from the first reduction in a year. The cap has fallen from an annual average of £1,849 between April and June to £1,720 for July to September.
Cornwall Insight forecasts a further slight decline when the cap adjusts again in October. Whilst the current level is 28 per cent lower than at the height of the energy crisis, it remains 10 per cent higher than the same period last year.
Ofgem said the net cost of the infrastructure investments amounts to “around £24 a year or less than 40p per week by March 2031”.
The regulator continues to recommend consumers shop around for fixed-rate deals that may offer savings compared to the price cap.