London (Platts)--17Dec2012/734 am EST/1234 GMT

UK energy regulator Ofgem said Monday it had earmarked GBP24.2 billion ($39.2 billion) to upgrade the national gas and power grids, which would raise annual household bills by around GBP15.10 compared with 2012.

Monday's announcement is an increase from its previous estimate of GBP22 billion in a consultation in July.

Ofgem said GBP4.5 billion will only be made available over the course of the price control period between April 1, 2013 and 2021 where the need can be justified.

This brings the total cost of running and maintaining the UK's energy networks up to 2021 to GBP38.2 billion, Ofgem said.

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Of the total, up to GBP15.5 billion will be spent to upgrade the high voltage electricity transmission network in England and Wales and the high pressure gas transmission network across Britain, which are operated by national transmission system operator National Grid.

The grid operator said in an email Monday that Ofgem's "proposals are a lengthy and complex set of documents" and that it "will be spending the next few months on analysis before deciding on our course of action. This will be communicated to Ofgem no later than early March 2013."

During Ofgem's consultation in July, National Grid said the regulator's initial plans would not give enough incentives to essential investments.

Ofgem said the proposals include GBP8.7 billion for maintenance of the low pressure gas networks that carry gas to homes and businesses.

Also, GBP500 million will be initially available for transmission companies in relation to existing infrastructure in areas of natural beauty and around GBP470 million will be earmarked for new infrastructure.

--Anuradha Ramanathan, anuradha_ramanathan@platts.com
--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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