Energy bills will rise by £7 next year to fund £22 billion worth of changes to the energy infrastructure, with the figure set to rise to £15 a year by 2021 – an average of £11. However, the National Grid has slammed the proposals as inadequate.
It had originally proposed spending £30 billion, which would have added around £20 annually to household energy bills. But Ofgem capped that at £22 billion, under regulation which allows the industry regulator to control the National Grid’s expdenditure and rate of return.
Responding to Ofgem’s plans, the energy distributor released a statement saying:
“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 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.”
Around £15 billion of that investment will be used to upgrade Britain’s electricity distribution networks and high pressure gas networks, including ‘sub-sea electricity cables linking England/Wales and Scotland’.
The work will create around 7,000 new jobs and connect around 80, 000 fuel poor homes to the gas network. Ofgem will be able to approve a further £5 billion where there is ‘a demonstrable need for the infrastructure’ and the investment will remain subject to consultation in an attempt to make sure it is good value for consumers.
Energy bills could be set to rise further following a government announcement, which could come later this week announcing its investment in wind farms, which will see UK households foot the bill for further investment in renewable energy.
Responding to the announcement, Ann Robinson, Director of Consumer Policy at uSwitch said: “The average household energy bill today is £1,252 a year so it’s not hard to see why an increase will hurt consumers’ pockets. Already over a third of consumers say that household energy is unaffordable, while more than eight in ten rationed their energy use last winter because of cost.
“This is the reality of the energy crisis facing British homes today. However, it is welcome that as part of this investment more homes will be connected to the gas network – this will be a significant step in reducing fuel poverty as it will reduce their energy costs.
“But for consumers generally they should see this announcement as an early indication of where their fuel bills will be heading over the next few years. It’s important that they start to protect themselves by using less energy and paying the lowest possible price for the energy they do use. By learning to manage our energy bills in this way we can start to keep a lid on these costs.”
Cutting energy bills
- Cut your energy bills by using less energy and increasing your energy-efficiency – take a look at our energy efficiency tips
- If you’re worried about how you’re going to pay your bill, speak to your energy supplier. They can arrange a repayment plan so you can pay your bill gradually. Read our article on energy debt to find out more.
- Big projects such as a new energy efficient boiler or home insulation can be expensive, but the savings you make through cutting the price of your energy could be re-invested into energy efficiency measures so that you reap even greater rewards in the future.
- Find out if you could be eligible for an energy efficiency grant to help you pay for home improvements that could save you money and help the environment.