Published by Global Banking and Finance Review
Posted on July 1, 2025
By Susanna Twidale
LONDON (Reuters) -Britain's energy watchdog has given the go-ahead to a 24 billion pound ($33.08 billion) investment to upgrade the country's transmission system, but said the move could push up network charges on household bills by more than 100 pounds.
Tuesday's provisional decision from Ofgem comes as the Labour government faces mounting pressure from opposition parties over the affordability of its net zero plan, despite its pledge to cut bills by 300 pounds a year by 2030.
Ofgem said the announced investments would add a total of 104 pounds to the average household bill by 2031, but that once savings from the projects were included the net cost to consumers would be around 24 pounds each year.
"Ofgem's price controls prioritise value for money for consumers while enabling this essential investment. This will more than pay for itself by getting more renewable electricity on the grid to protect bill payers from volatile fossil fuel markets," a spokesperson for Britain's Department for Energy Security and Net Zero said in an email.
Under Britain's regulatory framework, gas and electricity network companies must submit project plans and expected costs of investment which are assessed by Ofgem.
Consumers pay for the investment through network charges, which currently make up almost a quarter of an average household energy bill.
The funding will allow for 80 transmission projects, with 15 billion pounds to be spent on upgrading the country's gas network and 8.9 billion on expanding the electricity network, Ofgem said.
Ofgem said the country's gas grids will still be needed to provide back-up power as the system transitions to more renewables while shifting away from gas for home heating and industrial use is expected to take many years.
SSE, which owns Scottish and Southern Electricity Networks Transmission, said that Ofgem's plan was not sufficient to deliver the scale of investment needed to deliver the government's 2030 clean power plan.
"(It) does not go far enough to deliver the investible, financeable and ambitious framework required to unlock the unprecedented levels of investment needed to deliver lower and more stable bills," it said in a statement.
National Grid said it would review the details of the draft determination.
A consultation on the plans will be open until August 26, Ofgem said.
($1 = 0.7256 pounds)
(Reporting by Susanna Twidale in London, additional reporting by Raechel Thankam Job in Bengaluru; Editing by Jan Harvey and Louise Heavens)
