British households face being pummelled with higher energy bills for years to come in a bid to fund a massive £28billion upgrade of the UK power network.
Levies are due to rise £108 by 2031 to cover the cost of the huge investment in the electricity and gas network, regulator Ofgem has revealed.
Some £60 of that will go on the electricity grid – which has to be improved as part of the drive to Net Zero – and £48 on gas.
The increase is more than expected, having been pencilled in at £104 in the watchdog’s draft verdict in July.
At that point the total investment was set to be £24billion. The new figures splits between £17.8billion on gas and £10.3billion on the high-voltage electricity network.
It undermines Rachel Reeves’ claims at the Budget to be slashing £150 off typical energy bills by paying some green levies out of general taxation.
Net Zero Secretary Ed Miliband has previously insisted he stands by Labour’s election vow to reduce energy bills by £300 by 2030.
Ofgem insisted it would ensure taxpayers get ‘value for money’, arguing that wider reductions in costs would mean the rise in bills should only be £30 over the five years.
Chief executive Jonathan Brearley said: ‘The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices.
‘But this is not investment at any price.
‘Every pound must deliver value for consumers.
‘Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we’re setting as the industry scales up investment.’
But shadow Net Zero Secretary Claire Coutinho said: ‘Ed Miliband’s promise to cut energy bills by £300 is being shown up as an even bigger con each and every day.
‘Now hardworking families across the country will see their energy bills soar to pay to install hundreds of miles of cables and pylons to connect all of Ed’s wind farms to the grid.’
Britain already has the highest electricity prices in the world and experts say Ed Miliband’s plans are going to lock us into even higher bills for longer. Starmer needs to step in and stop him before he causes lasting damage to our economy.
Greg Jackson, founder of Octopus Energy, said: ‘Of course we need new infrastructure but these plans risk pushing bills ever higher.
‘Every bit of these plans needs examining carefully and serious challenge to see what can be saved.
‘Cheaper batteries and more flexibility could cut bills by billions, as could modern grid technologies and more competition.’
A Department for Energy Security and Net Zero spokeswoman said: ‘This government is taking action to bring down energy bills for families, with the Budget taking an average £150 of costs off bills in April, and expanding our £150 Warm Home Discount to over six million families.
‘Upgrading our gas and electricity networks after years of underinvestment is essential to keep the lights on and ensure energy security for our country. Without these plans, which were first set out under the previous government, costs would spiral and our security would be compromised.
‘The only way to bring down bills for good and get off the fossil fuel rollercoaster is with this government’s mission to deliver clean homegrown that we control.’
Ofgem has been reviewing the plans put forward by energy network companies – electricity transmission owners, National Gas and gas distribution companies – since the start of the year and has made reductions of more than £4.5billion compared with the initial £33billion plans submitted.
But it increased the amount that was first proposed in July following push-back from network firms, who said more was needed to account for extra electricity transmission development and infrastructure health, among other reasons.
Ofgem said the 80 new power projects the investment will help fund include boosting the grid’s capacity through new power lines, substations and other technologies, to handle the flow of electricity from new renewable sources.
Scottish and Southern Electricity Networks, which is owned by SSE, said: ‘The investment it delivers will help reduce reliance on imported energy from overseas, remove grid bottlenecks and strengthen energy security, as well as acting as a major catalyst for economic growth, jobs and supply chain investments across the UK to unlock the country’s full potential.’
National Grid, which runs much of Britain’s electricity grid, said it welcomed Ofgem’s ‘recognition of the need for significant investment into the electricity transmission sector’ and would review whether the package approved ‘delivers an overall framework that is both investable and workable’.
