Energy bills could rise by £11 on average each year for the next eight years to help pay for upgrades to the UK’s gas and electricity networks, energy regulator Ofgem has said.
Ofgem said bills could rise by £7 in 2013, rising to a £15 increase in 2021. The average dual fuel bill already stands at £1,310 a year.
About £15bn of the proposed £22bn investment will go towards the upgrade of the electricity network in England and Wales and the UK’s gas networks.
The rest, approximately £7bn, will be spent on ensuring the low pressure gas networks, which deliver gas to home to businesses, are reliable and safe, the regulator said.
The regulator said the work could create 7,000 jobs and secure Britain’s energy supply.
The upgrades, implemented by National Grid, which runs the high voltage and high pressure gas transmission networks, could include new sub-sea electricity cables linking England and Wales with Scotland.
The proposals would also enable the gas distribution companies to connect around 80,000 “poor fuel households” to the gas network and pay for carbon monoxide awareness programmes.
Ofgem chairman, Lord Mogg said: “As Ofgem’s Project Discovery set out, Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies.
“This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible.”
But National Grid said the proposals “differ substantially” from its own business plan submissions.
“While the information currently available is limited, 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,” the company said in a statement.
Ofgem is responsible for setting price controls on National Grid and the regional gas distribution companies, Scotia Gas Networks, Northern Gas Networks and Wales & West Utilities.
Ofgem’s proposals will be published for consultation on 27 July, with final proposals due by December 2012.
