Energy bills: Ofgem confirms prices are going up - despite Government £150 off help announced in 2025 Budget
Households face rising energy costs even as a £150 Government discount is promised 🏠
- Ofgem has approved a £28bn upgrade of Britain’s gas and electricity networks to modernise infrastructure
- The investment will fund around 80 major projects, including new power lines, substations, and tech for renewable energy
- But network charges on household bills are expected to rise by £108 by 2031, even after long-term savings
- The Government has promised a £150 Budget discount on energy bills from April 2026
- Energy firms warn that additional costs could still push bills higher, leaving households facing uncertainty despite the discount
Households are being told to expect higher energy bills over the coming years, even as the Government orders suppliers to pass on a promised £150 discount announced in last week’s Budget.
The mixed messages come after regulator Ofgem approved a huge £28 billion upgrade of Britain’s ageing energy networks, an investment it says is necessary to save money in the long run, but will push up costs in the short term.
Its decision, which covers the five years up to 2031, allows gas and electricity companies to spend far more than first planned.
The regulator originally approved £24 billion over the summer, but after energy firms argued they needed extra funding to fix equipment and strengthen infrastructure, the final figure has been increased to £28 billion.
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Around £17.8 billion of this will go into gas networks and £10.3 billion into the high-voltage electricity grid.
The investment will fund around 80 major projects, including new power lines, substations and digital technologies to handle far larger volumes of renewable electricity.
What does it mean for household bills?
The biggest impact for households will be an increase in network charges, the portion of your bill that pays for pipes, wires and maintenance. These charges currently make up roughly a fifth of the annual energy bill.
Ofgem now expects them to rise by £108 by 2031, taking the average network cost to around £330 a year. That’s slightly higher than the £104 increase predicted after the regulators first network investment decision.
The £108 rise breaks down to £48 for gas network upgrades and £60 for electricity grid improvements.
After taking into account expected savings of around £80 from using energy more efficiently and relying less on imported gas, Ofgem says the overall rise in household bills should be about £30 — around £3 each month.
But the timing is awkward for households, following an unexpected 0.2% increase to the energy price cap from January, caused by Government-related costs that have cancelled out falls in wholesale gas prices.
And despite the promised £150 Budget discount set for April, suppliers have warned that new charges and policy costs could continue pushing bills upward.
‘Essential upgrades’
Ofgem chief executive Jonathan Brearley defended the investment plan, arguing that failing to modernise the network would lead to even higher costs later.
“Every pound must deliver value for consumers,” he said, adding that Ofgem will “hold network companies accountable for delivering on time and on budget” as Britain shifts to cleaner, more secure energy.
The Government says the upgrades are essential after “years of underinvestment” and insists its £150 discount will still cut bills next spring.
Chancellor Rachel Reeves plans to fund the discount by scrapping the Energy Company Obligation (Eco) scheme, which she says had been adding £1.7 billion a year to consumers’ bills.
But making sure everyone gets the discount is now a key concern. Energy Secretary Ed Miliband has asked suppliers to ensure that households on fixed tariffs (about 37% of customers) also get the full £150 cut.
These customers’ rates are locked in for the duration of their contract, meaning any Government-led cut would not automatically reach them.
The energy industry has responded cautiously, supporting the plan to lower bills but warning that new costs are likely in the future.
With 55 million homes on a mix of fixed and variable tariffs, the coming months could be uncertain, leaving households facing higher bills even with promised discounts.