Ofgem: £24bn UK energy network upgrade will add £12 to energy bills

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Ofgem has granted permission for UK transmission firms to put an average of £12 extra on top of energy bills.

The energy regulator has given the green light to a £24 billion gas and electricity upgrade over the next eight years - resulting in the added costs.

However, Ofgem said it had cut around £7bn from the total cost of the work - with those in the industry requesting closer to £29.4 billion.

National Grid had previously criticised Ofgem's suggestions for not going far enough to incentivise companies to carry out the necessary work.

The firm has until March 2013 to respond to Ofgem's recommendations; if they believe it to be unfair and wish to raise a referral to the Competition Commission.

The vast bulk of the money - around £15.5 bn - will go towards a combination of upgrading and renewing the high voltage electricity network across England and Wales, as well as the high pressure gas network throughout the UK.

The rest of the money will go towards ensuring the gas networks remain safe, as well as seeing 80,000 homes connected to a gas network for the first time.

National Grid is responsible for a variety of the UK's electricity grids, including the main high voltage grid. It is also responsible for the UK's high pressure gas network, and shares responsibility for the rest of the low pressure networks and also the low voltage electricity network with other firms.

These firms will then pass on the fees to energy consumers and domestic customers with the various energy suppliers, such as the Big Six firms - who are all part of the Warm Home Discount Scheme.

Under the new proposal, the average rise in bills between the period of 2013 and 2021 will be £12 a year - this will start at something closer to £8 at the beginning of the period and rise up to as much as £15.10 in the latter stages of the period.

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