Energy Price Rise

The cost of "rewiring" Britain's energy network could add an average £6 a year to consumers' dual fuel bills over the next decade, the industry regulator has said.

Ofgem said £32 billion worth of investment in pipes and wires was required across the country, twice that seen in the last 20 years, to secure supplies to households and to move to a low-carbon economy.

The watchdog said a hike in bills would support a revamping of Britain's "ageing networks", which were mostly built in the 1950s and 1960s.

Energy networks need replacing as demand increases and consumers change the way they use energy - such as charging electric cars overnight, Ofgem said.

Ofgem, the Office of the Gas and Electricity Markets, promotes competition in energy wholesale and supply markets and regulates them so there is adequate investment in the networks.

The regulator also revealed a new pricing model, which it said represented the "biggest change to the regulatory framework for 20 years".

The new model moves away from previous inflation-tied controls to an incentive-driven approach that rewards more efficient companies. Ofgem added that the proposals could save consumers up to £1 billion.

Ofgem chief executive Alistair Buchanan told the BBC Radio 4 Today programme the investment would be supported by a 6% increase on the current average household's total annual electricity and gas bill over the next decade.

He added: "It is going to be basically £6 a year over the next 10 years."

The warning followed a report from Ofgem last week which indicated that bills could increase as suppliers were seeing big rises in wholesale costs.