Ofgem approves investment boost for UK’s electricity distribution networks
OFGEM, the energy watchdog, has approved a 25 per cent increase in electricity distribution networks over the next five years, allowing it to spend £1.3bn a year on ageing infrastructure. Funds will also go towards developing “smart grid” technology.
Ofgem set out the plans in its price control proposals for electricity distribution for 2010-15. It said it will take the average electricity bill up to £20 a year by the end of the allotted time.
Meanwhile, the group is putting together a financial incentive which will reward companies who invest in cutting dioxide emissions.
Ofgem’s chief executive Alistair Buchanan, said the incentive would “put jump leads on the companies to spark up their green ideas”.
He gave the rise in capital spending the go-ahead in a drive to address greenhouse gas emissions.
But Ofgem’s report did not include the cost of borrowing which it would expect electricity companies to pay, nor how to deal with pension fund deficits at the companies.
Both will have to be finalised before November. The levels agreed on will affect the amount electricity companies are allowed to charge.
“At this advanced stage of the process, it is of some concern that there remain a large number of outstanding issues,” David Smith, chief executive of the Energy Networks Association, which represents the industry, said.