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Gas prices set to rocket in next decade

Gas prices are expected to rise by 27 per cent by the beginning of the next decade due to higher distribution costs.

Gas network owners, including National Grid, have told the energy regulator that the cost of upgrading their facilities will significantly increase between 2013 and 2021 – a rise that would ultimately be passed on to consumers if it is waved through.

Network owners claim that the cost increases will pay for the replacement of steel pipes with plastic tubing, and cover the cost of disruptive street works.

In submissions to the Ofgem watchdog, Northern Gas Networks, which supplies energy to 2.6 million customers in northern England, said costs would increase by 27 per cent.

Increases of 11 per cent have been proposed by the largest distributor National Grid, which covers 10m homes including in London, and the second largest, Scotia Gas Networks, which covers Scotland and the south-east, claimed costs would also rise by 11 per cent.

Wales and West Utilities put forward the second highest increase, at 22 per cent.

The gas networks supply energy to a total of 20m homes in the UK.

The GMB trade union, which represents around 30,000 energy industry workers, warned that thousands of jobs were at risk due to the increased use of subcontractors in the eight-year plans.

“We are in a perfect storm for consumers,” the union said. “In an industry that is less safe, with lower standards of service, it is the economics of the madhouse.”