Major projects to improve the UK's gas and electricity networks will add an average �12 to bills

Energy network improvements will increase bills

Major projects to improve the UK's gas and electricity networks will add an average £12 to bills over the next eight years.

Ofgem's final recommendations allow companies such as National Grid to spend a total of £24.2bn on investing in new and upgraded infrastructure, more than the £22.7bn proposed by the regulator in July.

But the figure is still short of the £29.4bn originally requested by the industry, raising the prospect of a referral to the Competition Commission.

National Grid will respond to Ofgem's recommendations by March, but in the summer it accused Ofgem of not going far enough to incentivise companies to carry out the work needed.

The cost of this investment in infrastructure projects, such as laying undersea cables linking Scotland with England and Wales, will mean tariffs lift by an average of £8.50 in 2013/14 and £7.30 the following year, rising to £15.10 in 2020/21. The price rises are not cumulative.

The UK's high-voltage electricity grid, high-pressure gas network and some of its low-pressure gas networks are run by National Grid. The rest of the low-pressure gas network and the low-voltage electricity network are run by other companies. These companies pass on fees to consumers and households via energy suppliers, which will rise under the proposals.

The majority of the money – up to £15.5bn – would be used to upgrade and renew the high-voltage electricity network in England and Wales and the high-pressure gas network across the UK, creating some 7,000 jobs in the supply chain.

A further £7bn would be spent on making sure the gas networks to homes and businesses remain safe and reliable and would connect 80,000 households to the gas network for the first time.

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