Ofgem has confirmed the funding and performance framework that will govern Britain’s gas and electricity networks from April 2026 to March 2031, setting up what it describes as a multi‑billion pound investment programme to upgrade grid capacity and resilience. The RIIO‑3 price control period succeeds RIIO‑2, which runs to 31 March 2026, and will determine allowed revenues for monopoly network operators against defined output and efficiency targets.
The Final Determinations approve an initial £28bn of expenditure, split £17.8bn for gas networks and £10.3bn for electricity transmission. Ofgem indicates that, once all projects and later phases are taken into account, total gas and electricity network investment over the period could reach around £90bn.
Ofgem has front‑loaded spend on maintenance, asset replacement and operations to mitigate future system shocks and enable faster integration of low‑carbon generation by expanding transmission capacity. The regulator estimates the package will add about £108 to household bills by 2031 (£48 gas, £60 electricity), but argues that avoided costs from reduced gas import dependence and lower constraint payments equate to a net saving of roughly £80 versus deferring works, leaving an overall net bill increase of around £30 by 2031.
Following detailed scrutiny of company business plans, Ofgem says it has cut more than £4.5bn – about 15% – from an initial industry proposal of roughly £33bn, rejecting elements it judged not in consumers’ interests. The settlements embed delivery and efficiency requirements, with funding to be released in stages and subject to clawback where allowances are not used.
On the electricity side, transmission owners will receive funding to progress around 80 projects over the five‑year control, including new overhead lines and substations to move renewable and other generation to demand centres and relieve existing bottlenecks. These schemes are intended to reduce constraint payments and support the wider electrification of heat and transport as system demand rises.
Transmission operators’ initial reaction to the Final Determinations has been cautiously positive after criticising August’s draft decisions as under‑funded. National Grid Electricity Transmission has welcomed Ofgem’s recognition of the need for significant transmission investment and noted the allowance for a 6.12% real cost of equity at 60% gearing, but will now review the detailed package, licence modification proposals and overall investability ahead of a formal response expected in early March 2026.
SSEN Transmission has similarly acknowledged improvements to baseline expenditure and financial parameters compared with the draft position, while signalling that it will undertake a full assessment once Ofgem publishes the remaining documentation. SP Energy Networks has highlighted that the settlement supports plans to invest up to £12bn in Central and Southern Scotland, describing this as a record programme aimed at unlocking capacity, cutting constraints and delivering long‑term regional economic benefits.
The determinations will be critical to the delivery timetable for new grid infrastructure required to connect offshore wind, onshore renewables and new industrial loads, and to maintain security of supply as legacy assets age. Ofgem maintains that early, strategic reinforcement of the transmission system is the most cost‑effective route to reducing future constraint costs and exposure to volatile gas markets, lessons underlined by the price spikes of 2022.
However, the regulator also faces pressure to avoid over‑investment and excessive investor returns, given that network costs are ultimately recovered from consumers. The RIIO‑3 package attempts to balance these concerns through tighter allowances, stronger incentives and staged release of capital, but whether it will attract sufficient private finance at acceptable cost will depend on the final licence wording and investor risk assessments.
Ofgem will shortly consult on proposed licence modifications, giving network companies, contractors and wider stakeholders an opportunity to interrogate the detailed output measures, uncertainty mechanisms and delivery milestones. Network operators have already indicated they will scrutinise the final documentation to confirm that the settlements can support the scale and pace of grid build‑out required to meet the UK’s decarbonisation and energy security objectives.
Chief executive Jonathan Brearley said the funding package is designed to keep Britain’s networks among the safest, most secure and resilient globally while supporting the transition to new forms of energy and new industrial demand. He stressed that Ofgem will hold companies to account on time and budget performance, with strong consumer protections ensuring that funds are only released when needed and clawed back if not deployed, so that households and businesses receive value for money from the RIIO‑3 investment cycle.
