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Ofgem to overhaul UK's energy grid at no cost to consumers

·Finance Reporter, Yahoo Finance UK
·2 min read
Ofgem  General view of a DeLonghi kettle next to a cup of coffee in a kitchen in Basingstoke, Hampshire. Ofgem is expected to announce that the energy price cap is to rise by 50 percent because of soaring wholesale gas prices, meaning the average bill could hit �1,915. Picture date: Thursday February 3, 2022.
Ofgem has said customers will not see their energy bills rise amid plans to pump £21bn into upgrades for the nation's electricity networks. Photo: PA

Ofgem has unveiled a £20bn-plus plan to ramp-up local energy grid capacity across the country but the regulator has assured consumers that they will not see their energy bills rise further because of it.

The proposed package of £20.9bn includes £2.7bn worth of upfront funding to boost grid capacity.

The energy regulator said the upgrade would allow consumers to be given more control to save money through regularly updated prices for peak and off-peak demand.

Read more: Energy bills: UK working on plan to limit impact of gas shortages

Ofgem's aim is to help create greener and more sustainable energy grids across the UK, thereby boosting grid capacity, improving customer service, and building resilience against power outages.

This follows extreme weather events such as Storm Arwen, which left more than a million homes without power last November, and the government’s pledged expansion of renewables as part of its supply security strategy.

Amid concerns that the plans would push up energy bills, the Ofgem chief executive, Jonathan Brearley, insisted the cost to consumers to pay for the network would remain “roughly the same”.

Brearley said: “We’re determined to get the best possible deal for consumers and the proposals we’ve published today will mean that substantial additional investment can be made to deliver net zero without placing any further pressure on bills.”

Households currently pay between £90 and £100 from their bills to maintain the network.

Read more: Action Fraud warns over energy bill rebate text scam

Ofgem said in its statement: “Consumers will not see any additional costs as result of this investment as efficiency savings and reduced investor returns deliver the cash needed.”

Consumers are facing extraordinary pressure on their energy bills – which spiked to a record £1,971 per year in April amid supply shortages and the war in Ukraine.

Energy bills are set to soar again. Chart: Yahoo UK
Energy bills are set to soar again. Chart: Yahoo UK

Last month, Ofgem warned the price cap could rise to £2,800 per year in October, while energy specialist Cornwall Insight has forecast £3,000 bills in January.

Watch: Households could be offered cheaper energy if they cut usage at certain times