Fuel Bills To Rise As Networks Get Upgraded

Fuel Bills To Rise As Networks Get Upgraded

The energy watchdog has announced a major upgrade to Britain's gas and electricity networks that will be funded by a rise in consumer bills.

The £24.2bn investment in the UK's ageing infrastructure will see a rise in fuel bills of up to £15.10 a year on average, Ofgem said.

The total amount is more than the £22.7bn proposed by the regulator in July, but less than the £29.4bn originally requested by the industry.

Ofgem said this reduction was made to "ensure value for money for consumers".

National Grid's high voltage electricity network, high pressure gas networks and low pressure gas networks across Britain will benefit from a £15.5bn upgrade.

The company, which had accused the regulator of not going far enough to incentivise companies to carry out the necessary work, said it would take time to review the proposals before commenting on them by March.

Some 7,000 jobs will be created in the supply chain as a result of the work.

A further £7bn will be spent connecting 80,000 households to the gas network for the first time, and ensuring the connections to homes and businesses are safe and reliable. 

The cost of the projects - which also include laying undersea cables linking Scotland with England and Wales - will see tariffs rise by an average of £8.50 in 2013/14, £7.30 the following year, rising to £15.10 in 2020/21.

Ofgem's chairman Lord Mogg said the investment "provides a framework of strong incentives and penalties to stimulate the innovative and efficient operations of Britain's energy companies".

It comes amid warnings that a further 300,000 people could be pushed into fuel poverty by Christmas.

The latest round of energy price rises has increased the average annual energy bill by 7%, the Fuel Poverty Advisory Group said, adding that estimates have already shown over nine million households could be living in fuel poverty by 2016.