Households that delay switching to heat pumps may face a £2,000 increase in energy bills.
This is because the cost of maintaining the gas network’s 174,000 miles of pipes and pumps will spread to fewer customers as more people switch to low carbon heat systems.
According to Ofgem’s projections, gas charges will rise slowly through the 2020s and 2030s but will increase significantly in the 2040s, potentially reaching at least £2,000 per year.
ELN understands this is just a scenario that assumes no action is taken and forms part of Ofgem’s rationale for planned measures.
Currently, 23 million households with gas boilers pay an average of £170 per year in charges.
The energy regulator said: “On consumer bills, our initial modelling suggested that there could be a sharp and significant increase in gas network charges in the mid-2030s due to falling numbers of gas network domestic consumers.
“This potential increase in network charges could create intergenerational unfairness as future consumers would face substantially higher costs.
“We noted that changing our regulatory depreciation policy in RIIO-3 could enable a fairer balancing of costs across generations of consumers by mitigating against the risk of significant increases in depreciation charges from the mid-2030s onwards.”
In recent documents about RIIO-3 price control for gas distribution and electricity transmission sectors, Ofgem explained the decision to accelerate depreciation for gas network companies.
Ofgem said: “We have decided to address these risks by accelerating depreciation for gas network companies during RIIO-3.
“Accelerating the depreciation rate, by increasing depreciation amounts during RIIO-3, will smooth the depreciation element of consumer bill payments over time. One of the side effects of this will be to increase retail gas prices relative to electricity retail prices.
“This would have the effect of making the economics of switching from gas boilers to heat pumps better for consumers. We will consider both the net zero impacts as well as distributional impacts before setting the rate of accelerated depreciation for gas at Draft and Final determinations.”
Industry statistics show that between 2020 and 2024, the UK installed an estimated 250,000 heat pumps, while 25.5 million homes still use oil or gas boilers.
An Ofgem spokesperson told Energy Live News: “Decisions on the future of the gas network are for the government. Our role is to ensure the transition away from natural gas is fair and at the lowest possible cost to current and future consumers.
“Final decisions on gas network investment expenditure for the period April 2026 to March 2031 will be taken next year following further consultation.”
A Department for Energy Security and Net Zero spokesperson told Energy Live News: “We are on a mission to make Britain a clean energy superpower to cut bills, create jobs and deliver energy security with cheaper, zero-carbon electricity by 2030.
“We will stand up for consumers, working with the regulator to ensure we continue to have safe and reliable networks to meet our energy needs and keep bills as low as possible.”
