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Ofgem Tightens UK Grid Spending Rules to Shield Consumers From Higher Bills

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Ofgem on Thursday outlined new rules for Britain's 2028-2033 electricity grid investment cycle aimed at meeting rising power demand while protecting consumers from higher electricity bills tied to unnecessary grid spending.

The regulator's Sector Specific Methodology Decision sets the framework for reviewing business plans from Britain's five electricity distribution operators before final approvals arrive in 2027.

Ofgem expects electricity demand to grow through the next decade but said uncertainty around electrification requires utilities to phase investment more carefully.

The regulator now requires utilities to demonstrate that projects remain necessary even after employing flexible technologies that maximize existing grid capacity and reduce bottlenecks.

Britain's distribution network spans about 800,000 kilometers and supplies nearly 30 million customers, with future planning tied to the National Energy System Operator's 2026 regional strategy.

Ofgem said ED3 will tighten baseline capital rules for grid resilience and expansion projects while linking utility revenue more closely to performance standards.

The framework also introduces stricter cost controls through evidence thresholds and in-period reviews that could approve, delay or reduce spending as demand changes.

Utilities must prioritize "build and flex" strategies using smart electric vehicle charging, battery storage and demand-response tools before building major infrastructure, the regulator added.

Ofgem tightened cost controls to stop utilities from passing unnecessary or speculative grid investment costs onto consumers while ensuring infrastructure projects match actual demand growth.

The regulator also ordered utilities to improve support for vulnerable customers, strengthen outage response plans and meet stricter delivery targets tied to financial rewards and penalties.

The regulator plans to increase oversight through standardized reporting, performance dashboards and benchmarking measures that could trigger penalties for missed targets.

Ofgem also tightened grid connection rules to speed approvals for electric vehicle chargers, rooftop solar systems, housing projects and industrial developments.

Britain's five electricity distribution operators must submit 2028-2033 business plans covering 14 license areas by December, with Ofgem expected to publish draft decisions next summer and final consumer cost rulings by the end of 2027.

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