Energy bills to rise by over £100 to pay for energy grid investment: "Can UK PLC afford to keep the lights on?"
ENERGY bills in the UK are set to rise by over £100 to pay for energy grid investment as experts ask: "Can UK PLC afford to keep the lights on?"
Household energy bills will rise to help fund a £28bn investment in the UK's energy network, Ofgem has announced.
The energy regulator has approved the funding in its five-year plan on improving electricity and gas grids. The money will go towards maintaining gas networks and strengthening the electricity transmission network.
The work is estimated to add £108 to energy bills by 2031.
Jonathan Brearley, Ofgem CEO, said: “The funding announced today will keep Britain’s energy network among the safest, most secure and resilient in the world. 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. Every pound must deliver value for consumers. Ofgem will hold network companies accountable for delivering on time and on budget, and we make no apologies for the efficiency challenge we're setting as the industry scales up investment. We've built strong consumer protections into these contracts, meaning funds will only be released when needed and clawed back if not used. Households and businesses must get value for money, and we will ensure they do.”
Financial experts said the rise was bad news for consumers and small businesses.
Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said: "Rachel Reeves will be furious that following her announcement to scrap the green levies on energy bills to reduce the amount the consumer pays, they will shoot back up more than they were pre-Budget. This is to do with the investment needed in our creaking national grid that serves the whole of the Uk.
"The National Grid hasn’t had any significant upgrade since 1960s despite massive tech improvements. Although this investment is going to squeeze the consumer, it could bring bills down over time. Our increasing use of renewable energy requires the upgrade as it’s difficult to connect this green energy with the main ‘supergrid’.
“Consumers and businesses are fed up with sky high prices but an upgrade won’t reduce these. Our over reliance on gas and lack of storage makes our prices ultra sensitive to market forces unlike Europe. The government needs a strategic energy review to formulate a long term resilience policy in the face of a rising cost of living and a more uncertain world.”
Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said investment in the energy grid was needed.
He continued: “Successful nations build on their infrastructure and we've gotten really bad at it and so in some ways we should expect there to be an ongoing cost for providing that infrastructure.
“In many areas investment has been the can that keeps being kicked down the road and the ultimate bill just keeps getting bigger. There appears to be a correlation between energy production and economic success, so if the government want growth, we should be focusing on energy.”
Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, said the UK could be at risk of higher bills as we become more reliant on AI.
He added: “That £108 isn't landing in isolation. It's stacking on top of standing charges that have already increased, price cap rises, and a subsidy model we've seen play out brutally in the US, where AI data centres are pushing household electricity bills up between 4% and 12% over the next few years as they hoover up grid capacity.
"Small businesses get hammered twice. They're paying commercial energy rates that dwarf domestic bills, then watching their customers cut discretionary spending because energy poverty is back. Meanwhile, the AI gold rush demands massive power, and American households are already funding the infrastructure for it.
"Britain's heading the same direction, it's just a case of when. The £28bn investment is necessary. Britain's grid is aging and we need resilience. But this funding model asks households to bankroll industrial transformation while their own energy security wobbles. Can UK PLC afford to keep the lights on?”
Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, said something was seriously wrong if consumers had to keep picking up the bill.
He continued: "Let’s call this what it is: a tax on existence. Energy isn’t a luxury choice; we have nowhere else to go to survive, and the suppliers know it. While energy giants consistently rake in record-breaking profits, Ofgem decides the struggling British household should pick up the tab for basic infrastructure investment.
"In a functioning market, investment is the cost of doing business, not an extra line item on a household bill. If these companies want the rewards of privatisation, they should bear the costs of maintaining their own grid."
Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, said the burden keeps falling on the population.
She added: "The war in Ukraine exposed just how vulnerable our energy supply is to external factors so moves to improve stability and security are good news. But, once again, households are being told to bankroll an energy overhaul they have no control over.
"The grid needs investment, but raising bills in a cost crisis is a tax by another name. Families and small businesses already pay some of the highest energy costs in Europe, yet the burden keeps landing on the same people while network operators report healthy returns.
"When bills rise to fund infrastructure, consumers deserve cast-iron proof that efficiencies are real, waste is gone, and profit is not being prioritised over people. Small businesses will feel this first. Higher energy costs drain cashflow and wipe out margins long before any promised resilience materialises. We cannot keep piling cost pressures on our citizens without consequences."
