Energy bills may rise by £11 a year

ENERGY bills could rise by £11 on average per year for the next eight years due to investment in electricity and gas networks, the regulator warned today.

Ofgem said the £22 billion work, which includes laying undersea cables and maintaining gas mains, will ensure Britain’s power network remains among the most reliable in the world and will create 7,000 jobs.

Average household bills will rise by £7 next year reaching £15 a year by 2021 to pay for the investment, which is subject to consultation.

National Grid said the proposals do not allow it to put up its charges by enough to encourage the investment needed in the UK’s infrastructure.

Today’s plans, which include connecting 80,000 households to the gas network for the first time, represent a significantly smaller amount than National Grid is understood to have asked for.

It wanted to spend £21bn on electricity transmission in the eight years from 2013 to connect new power plants across England and Wales and £9bn on gas pipelines. But Ofgem has said it can spend £17bn, with a further £5bn if there is a need.

National Grid suggested bills could increase by between £15 and £20 but Ofgem has limited this under its “price control” regulation.

Ofgem is understood to be driving a hard bargain with National Grid because it wants to keep prices down for consumers.

A National Grid spokesman said the current plans would fail to “incentivise the essential investments necessary”.

Ofgem chairman Lord Mogg said: “Britain faces an unprecedented need to invest to replace ageing infrastructure.”