Ofgem has announced up to £24.2 billion to deliver new and upgraded infrastructure for Britain's gas and electricity networks. Of this, £4.5 billion will only be made available over the course of the new, longer price control period of eight years (2013-2021) if companies are able to justify this expenditure. The cost of running and maintaining Britain's energy networks up to 2021 brings the total package to £38.2 billion.
The proposals earmark up to £15.5 billion to upgrade the high-voltage electricity transmission network in England and Wales and high-pressure gas transmission network across Britain, both operated by National Grid. This investment will help connect new sources of energy generation and ensure the continued reliable transportation of gas and electricity to homes and businesses..
Ofgem has improved funding arrangements to mitigate the visual impact of new and existing infrastructure. There will be £500 million initially available for transmission companies in relation to existing infrastructure in areas of natural beauty. For new infrastructure, approximately £470 million will be available to enable undergrounding.
Ofgem Chairman, Lord Mogg, said: “Ofgem's new and innovative price control — RIIO — delivers a sound regulatory environment that protects consumers by attracting the energy infrastructure investment that Britain needs at a fair price. This provides a framework of strong incentives and penalties to stimulate the innovative and efficient operations of Britain's energy companies.”
As Ofgem's Project Discovery in 2009 showed, Britain faces an unprecedented need to invest to replace aging infrastructure, meet environmental targets and deliver secure supplies. The increased investment needed to secure the robustness of the energy networks will have an impact on household bills. Including the proposals of the Scottish transmission companies and companies' operating costs, it is estimated that household bills will increase by an average of £12 annually.
For more information, visit www.ofgem.gov.uk.