Recovering the costs of energy infrastructure investment from customers
Blog
- Georgina Mills
- Director for Energy Systems Management and Security
- Publication date
Transitioning to a clean energy future presents investment opportunities for Britain. Through our Energy Cost Allocation and Recovery review, we will look at options for a fairer, more efficient and simpler way of recovering those costs.
Why We’re Launching This Review
Great Britain (England, Scotland and Wales) is transitioning from an energy system that draws heavily on fossil fuels to cleaner, renewable energy sources like wind and solar. We need to invest in our infrastructure to support this change. For example, by upgrading the pipes and wires that deliver energy and investing in more renewable sources of generation and storage. These system costs need to be paid for by customers through their bills.
As we invest in upgrading energy infrastructure, we believe it’s critical that costs are allocated and recovered fairly, and our billing structures need to keep pace. We're launching our review to ensure we have a comprehensive understanding of these changes and their impacts on customers’ bills. Our goal is to identify approaches that protect energy customers during the transition to renewable energy while supporting economic growth.
What We're Reviewing
We're in the early stages of our work and still exploring what areas the review should focus on. We're conducting our own analysis to support this. Consumers are central to our review, and we're therefore conducting consumer research, including deliberative engagement, as part of this phase of work. This is to gain clearer insights into their understanding of their bills and the wider energy system, as well as what they want and prefer.
As part of our review, we will examine areas such as:
- how the future energy system will develop and what this means for energy bills
- central themes in energy pricing, including how system-wide costs are distributed among all customers and what causes bills to vary by region
- how costs are currently shared between different types of customer groups. For example, the allocation of costs between different types of non-domestic consumers and whether this could support economic growth
- alternative approaches to passing costs to different types of customers, beyond the current approach of standing charges and unit rates
This review does not replace any existing and related work, and we're working closely with related teams in Ofgem and the Department of Energy Security and Net Zero. It is working alongside existing projects to create a unified approach to understanding and managing energy costs, including:
Standing charges
In February, we asked for people's views on introducing a zero standing charge option. This review builds on that work by looking at all system costs.
Network charging
Work on network charging is ongoing across the energy system. This review needs to consider the ongoing development and expected needs of the future system, including any Government decisions on The Review of Electricity Market Arrangements, which is looking at possible changes to how Great Britain's wholesale electricity market works.
How You Can Get Involved
Whether you're a household customer, business energy user or industry stakeholder, we want to hear your views.
In the summer of 2025, we intend to publish a call for input detailing our initial findings, the proposed approach, scope and focus of the review. Later in the year, we intend to publish a consultation on our initial policy options.
We welcome any examples or evidence from Great Britain and other relevant markets that could help with our early thinking and analysis on this review, including international comparisons of other energy markets that have experienced similar challenges. You can contact the project team at costreview@ofgem.gov.uk.