Households and businesses face £90bn bill for Miliband’s grid upgrades

A record £90bn is to be loaded onto household energy bills to help pay for grid upgrades linked to Ed Miliband’s net zero blitz.

Energy regulator Ofgem has today approved dozens of investment proposals put forward by the UK’s three transmission grid operators: National Grid, SSE and Scottish Power.

This will allow them to build more pylons and substations across the UK before adding the cost to consumer bills.

An initial £28bn investment package was approved by Ofgem on Thursday, with the total £90bn including a £17.8bn spending pledge by National Gas and other gas network companies.

In total, Ofgem predicts that households will pay £108 extra annually by 2031 to help pay for grid upgrades, which is likely to infuriate communities across the country as thousands of new pylons are built.

Ofgem argues that, alongside maintaining grid resilience, these investment costs will ultimately deliver savings of around £80 on an average domestic bill.

This will primarily be achieved through reduced reliance on foreign gas and decreasing payments to wind farms to switch off, otherwise known as “constraint costs”.

However, it also concedes that bills will rise significantly well before any savings become apparent.

It said: “Investing now to maintain world-class resilience and expand grid capacity is the most cost-effective way to harness clean power, [but] as investment for ongoing operations, asset replacement and maintenance filters through to bills more quickly than investment in network expansion, these costs will add more to bills despite representing a smaller share of the overall £90bn investment programme.”

Ofgem has also approved a sharp rise in the profits that power companies can make on such investments – lifting the rate of return from just over 4.1pc to nearly 7pc.

That decision will also have a long-term impact on bills.

All such costs will be loaded onto the standing charges that make up energy bills paid by households, businesses and industry.

The regulator says the money is needed to rebuild the nation’s high-voltage transmission grid for a future dominated by low-carbon power, such as wind, solar and nuclear plants.

However, critics say Mr Miliband’s pursuit of clean power by 2030 has killed off the North Sea and loaded billions of pounds in new costs onto hard-pressed consumers and businesses.

Energy bills in the UK are already among the highest in the world, with industry issuing multiple warnings that high energy prices are closing down factories and sending investment abroad.