Electricity bills to go up

The energy regulator Ofgem has given the go-ahead for electricity distribution firms to increase their charges by 1.3 per cent next year.

14:55 29 November 2004

The energy regulator Ofgem has given the go-ahead for electricity distribution firms to increase their charges by 1.3 per cent next year.

The move will increase pressure on household energy bills as distribution costs account for roughly one quarter of the average domestic charges. Around six pence will be added to the average monthly household bill.

After next year's increase, distribution charges will be capped at the rate of inflation for four years.

The decision to raise costs represents an about face from the watchdog, which had originally suggested that distribution companies would be forced to lower costs by around two per cent.

However, Ofgem explained that the increase was necessary to invest in ageing electricity grids.

The regulator expects the distribution firms to inject 5.7 billion into the network over the next five years.

Ofgem chairman Sir John Mogg stated: "We have produced a package of measures that strikes the right balance between attracting investment and ensuring that customer prices are no higher than they need to be."