Households will be made to cough up hundreds of pounds to pay for upgrades to the UK’s energy infrastructure over the coming years.
Ofgem, Britain’s energy watchdog, has approved a package of investment worth £28bn to be spent by 2031.
But the plans are expected to see about £100 added to people’s energy bills each year by the time the scheme is finished.
The regulator has earmarked £17.8bn to be spent on the country’s gas transmission and distribution networks over the next five years and £10.3bn to improve the high-voltage electricity network.
It has insisted this will save families money in the long run, with Jonathan Brearley, Ofgem’s chief executive, promising “every pound must deliver value for consumers”.
He added: “The investment will support the transition to new forms of energy and support new industrial customers to help drive economic growth and insulate us from volatile gas prices.
“But this is not investment at any price.”
Almost £18bn has been earmarked for improvements to the UK’s gas network. (PA)
The exact amount families will see added to their gas and electric bills will vary over the life of the project, but is expected to work out at roughly £108 per year – more than was initially predicted when draft plans were unveiled in July.
However, the ongoing works should also produce savings for consumers.
According to Ofgem, expansion of the electricity grid “alone is expected to reduce bills by £50 by 2031”, at least partly thanks to lower reliance on imported gas.
Further savings worth about £30 are expected to come from improvements to the gas network.
It is hoped this will mean the net increase for households will be about £30 per year by 2031.
The extra costs are also not expected to remain static, with early expectations that they will rise and fall over the course of the five-year project.
Consumers will see the cost of the project added to their network charges. (PA)
How will households pay for the upgrades?
Like most projects on energy infrastructure, costs will largely be passed on to consumers via the standing or network charges they pay to their gas and electric providers.
It will not appear as a separate item on bills in the way households often see additional precepts or levies added to their council tax bills.
This approach has been criticised by the End Fuel Poverty Coalition (EFPC), which has campaigned for energy firms to make clearer to consumers exactly what their bills pay for.
“We need to see more transparency in terms of standing charges are worked out and what all these charges actually mean,” said EFPC coordinator Simon Francis.
“The last time we [EFPC] did work on this there were about 14 different charges, all for slightly different things.”
Several schemes are available to help households struggling with their energy bills. (Getty)
What help can I get with my energy bills?
If you are struggling to pay for your gas or electric usage, several schemes offer financial aid to households, particularly over winter.
These include:
Winter fuel payment
Despite high-profile cuts, more than one million households still qualify for an annual winter fuel payment. The tax-free cash is available to anyone of state pension age who meets means-tested criteria, and can be worth between £100-300.
Fuel vouchers
If you pay for your gas or electric via a pre-payment meter, you may be able to get a top-up voucher. These are administered by local authorities and the scheme’s name can vary by area. Contact your council directly to find what support it offers.
Warm home discount
If you are already on benefits, you should be eligible for the warm home discount scheme, which could shave £150 off your electricity bill or add £150 to your prepayment meter. If you are eligible, you should receive a letter no later than mid-December. If you think you qualify but haven’t been contacted or received your discount yet, you can find out more here.
Cold weather payment
If you are on benefits and the area you live in experiences a period of very cold weather between November and March, you can receive a one-off payment to help cover extra heating costs. This should be sent to you every time the average temperature in your area falls below 0C for seven days in a row.
Debt grants
If you are in debt to an energy supplier, you may be able to get a grant to help pay it off. Contact your supplier directly for more information.