UK’s energy regulator green-lighted a £40bn ($53bn) investment programme into the country’s energy infrastructure that will run from 2021 to 2026.
The aim is for the funding to improve services, reduce the impact of the networks on the environment, and drive a fair price for consumers.
The spending package includes £30bn upfront funding for network companies, which run the pipes and wires that transport gas and electricity around Britain.
Ofgem also said it making “unprecedented additional funding” available for future green energy projects, which are aimed at eliminating emissions from the energy system and helping hit net zero targets.
Companies have indicated that £10bn of such projects could be in the pipeline.
However, Ofgem said there is no limit on the additional funding that could be provided, subject only to companies making good business cases.
Meanwhile through the package customers can expect to see a £2.3bn saving over the next five years, equivalent to an average bill reduction of about £10 before inflation.
The regulator said it secured this “by demanding greater efficiency from companies and lowering returns to shareholders by 40% to bring them in line with current market levels.”
Ofgem is also ensuring that £132m is earmarked to support the vulnerable in society, including carbon monoxide initiatives and funding new connections for those most struggling with their bills.
Ofgem’s CEO Jonathan Brearley said the package “massively boosts clean energy investment. This will ensure that our network companies can deliver on the climate change ambitions laid out by the prime minister”.
He added that “these costs must fall fairly for consumers. We are reducing the amount paid to shareholders so that they are closer to current market levels. This means that companies can attract the vital investment we need whilst making sure that consumer don’t pay more than is necessary to achieve this.”
Last month Ofgem said is considering lifting its cap on household tariffs by £21 per year to help companies which have been hit by a rise in unpaid bills.
This means millions of Brits may have to pay more for gas and electricity bills from April 2021 to help energy suppliers to cover the cost of those who can’t afford to pay for energy due to COVID-19.
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