The regulator has approved a plan to enhance energy security while enabling the transmission of more clean energy from renewable sources.
But the move means households will see the network charges on bills – which make up around a fifth of average annual bills – surge by £104 to £324 by 2031 to cover the cost of the extra investment.
The news was released on the same day the energy price cap fell from £1,849 to £1,720 per year.
Ofgem said an investment of more than £15bn will ensure the continued safe operation of the UK’s gas transmission and distribution networks, making sure they deliver safe and secure supplies of gas to households and businesses across the UK.
An initial £8.9bn investment is being committed to Britain’s high-voltage electricity network, with a further £1.3bn ready to go – to power the biggest expansion of the electricity grid since the 1960s.
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The draft settlement is the first step in an estimated £80bn investment programme boosting electricity network capacity. Ofgem said this will protect UK households from the volatile international gas markets that caused the massive fluctuations in energy bills in recent years.
Jonathan Brearley, Ofgem’s CEO, said: “Britain’s reliance on imported gas has left us at the mercy of volatile international gas prices, which, during the energy crisis, would have caused bills to rise as high as £4,000 for an average household without Government support. Even today, the price cap can move up or down by hundreds of pounds, with little we can do about it.
“This record investment will deliver a homegrown energy system that is better for Britain and better for customers. It will ensure the system has greater resilience against shocks from volatile gas prices we don’t control.”
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.”
