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Bills to rise as Ofgem allows £5 billion investment

04/12/2006

Energy bills are expected to rise as Ofgem has announced that it will allow Britain's energy networks to spend more than £5 billion on investment.

The regulator for the gas and electricity industries, Ofgem, will allow a 100 per cent increase in transmission systems investment in order to improve service by replacing the ageing assets.

Ofgem chairman, Sir John Mogg, said: "Investment in the backbone of Britain's gas and electricity networks is vital to maintain high levels of reliability and secure supplies for customers."

However, to fund the improvements to the system the cost would be passed on to the consumer with overall transmission costs increasing by eight per cent.

Charges for transmission currently make up three per cent of domestic household energy bills.

Sir John added: "Throughout the review Ofgem has sought to protect customers, who ultimately must pay for such investments, by scrutinising the companies' investment proposals and operating costs to make sure that the plans represent good value for money."

Ofgem has also announced that a safety net will be in place to protect customers if companies under-invest.

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