The UK's Office of the Gas and Electricity Markets, Ofgem, has approved a 25 percent increase in investment in the region’s electricity networks to £1.3 billion (€1.5 billion; $2.2 billion) a year for the next five years.
The approval, which formed part of Ofgem’s proposals for price controls on electricity distribution for the next five years, came as it also said it was creating a £500 million fund to trial new environmentally friendly technology.
Ofgem has proposed a £6.5 billion investment initiative for 2010-2015 in a push to upgrade the region’s electricity networks, up from £5.2 billion in the period 2005-2010. The regulator said the increase was 17 percent less than companies had forecasted they would need to spend.
While most of the electricity providers in Britain are international companies, Perth-based Scottish and Southern Energy, which provides electricity to Scotland and the south of England saw little movement in its share-price on the news. According to a report by the Financial Times, this could be owing to a lack of detail in the plans on the cost of debt the electricity providers would have to incur and how the deficits on their pension funds would be addressed.
In the report, Ofgem chief executive Alistair Buchanan, said he hoped that the new fund would “put jump leads on the companies to spark up their green ideas.” The fund would provide electricity companies with incentives to use low-carbon generating methods and to cut the loss of electricity across the network during the next five years.