Major projects to improve the UK’s gas and electricity networks will add an average of £15 to household bills within a decade, the regulator said yesterday.
Ofgem believes £22billion has to be spent on “critical infrastructure projects” such as laying undersea cables linking Scotland with England and Wales.
The cost of this will mean consumers, who already face a typical dual-fuel bill of £1,310, will see tariffs lift by an average of £7 in 2013, rising to £15 in 2021.
But National Grid, which runs much of the network, said the plans did not go far enough to incentivise energy companies to carry out the work needed.
At the heart of the row is the matter of how much energy companies are allowed to raise charges to consumers and businesses to help fund the work.
The UK’s high-voltage electricity grid, high-pressure gas network and some low-pressure gas networks are run by National Grid. The rest of low-pressure gas and electricity networks are run by other companies that pass on fees to consumers and households via energy suppliers, which will rise under the plans.
However, Ofgem has slashed 20% from the rises that energy companies had suggested they needed to fund the programme.
It is understood National Grid alone planned to spend some £31billion on its programme but Ofgem has limited the overall industry spend to £17billion, with a further £5billion if necessary.
A National Grid statement said: “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.”