Ofgem approves investment boost for UK's electricity distribution networks

OFGEM, the energy watchdog, has approved a 25 per cent increase in electricity distribution networks over the next five years, allowing it to spend &pound;1.3bn a year on ageing infrastructure. Funds will also go towards developing &ldquo;smart grid&rdquo; technology.<br /><br />Ofgem set out the plans in its price control proposals for electricity distribution for 2010-15. It said it will take the average electricity bill up to &pound;20 a year by the end of the allotted time.<br /><br />Meanwhile, the group is putting together a financial incentive which will reward companies who invest in cutting dioxide emissions.<br /><br />Ofgem&rsquo;s chief executive Alistair Buchanan, said the incentive would &ldquo;put jump leads on the companies to spark up their green ideas&rdquo;.<br /><br />He gave the rise in capital spending the go-ahead in a drive to address greenhouse gas emissions.<br /><br />But Ofgem&rsquo;s report did not include the cost of borrowing which it would expect electricity companies to pay, nor how to deal with pension fund deficits at the companies.<br /><br />Both will have to be finalised before November. The levels agreed on will affect the amount electricity companies are allowed to charge.<br /><br />&ldquo;At this advanced stage of the process, it is of some concern that there remain a large number of outstanding issues,&rdquo; David Smith, chief executive of the Energy Networks Association, which represents the industry, said.