Millions of households to see energy bills rise by £108 as regulator approves £28billion upgrade plan

The upgrade programme means network costs, which make up about one-fifth of an annual energy bill, will increase at a quicker pace than previously expected.

Ofgem's final ruling on price controls for network operators represents an increase from the £24billion initially proposed during the summer.

The additional investment means consumers will face higher costs than previously anticipated, with network charges climbing more steeply than the £104 rise outlined in July's draft decision.

Of this increase, £48 relates to gas networks while £60 covers electricity grid improvements.

The bulk of the funding - £17.8 billion - will be directed towards maintaining and upgrading Britain's ageing gas transmission and distribution networks through to 2031.

A further £10.3billion has been allocated to strengthen the high-voltage electricity network across the country.

However, the initial £28billion figure may prove to be just the beginning, with Ofgem indicating that total spending could ultimately reach £90 billion.

The regulator estimates that covering all associated costs will translate to approximately £3 per month extra on household bills by 2031, though short-term increases may be steeper before easing over time.

The Department for Energy Security and Net Zero (Desnz) said spending to improve energy networks was "essential" and stressed the Government was offering support with costs by cutting £150 off power bills next April.

Chancellor Rachel Reeves announced in last week’s Budget she would do this by scrapping the Energy Company Obligation (Eco) scheme introduced by the Tories in government.

A Desnz spokesperson said: "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 (energy) that we control."

The End Fuel Poverty Coalition has raised concerns about the scale of spending, pointing to data from its profits tracker showing that electricity and gas transmission and distribution companies have generated more than £50billion in profits since 2020.

The campaign group argues that while infrastructure upgrades are essential—particularly given declining North Sea gas reserves and historic underinvestment - such substantial sums of what amounts to public money require rigorous oversight.

Simon Francis, the coalition's coordinator, said the improvements are necessary "to ensure a reliable energy supply and to help homes benefit from renewables as they come online."

He warned, however, that the investment "shouldn't mean signing a blank cheque for network and transmission companies. These vast sums of essentially public money must come with proper scrutiny and guarantees for consumers."

The coalition coordinator highlighted that network firms have already accumulated billions during the energy crisis, with considerable returns going to offshore investors and so-called "vampire funds."

"Households can't keep footing the bill while private equity profits," he said.

"Every penny added to customers' bills must be spent delivering clear value for money and actively helping to reduce the cost of energy in the long-term and ensure energy security."