The original May proposal has been updated, slightly easing the controls on GDNs, who will now be allowed an increased yearly average of £628 million for operating costs. However, this is 13 per cent less than they had requested from the regulator.

Ofgem believes this will help GDNs to continue to replace ageing gas mains across the UK. Its new proposals are said to allow for £5 billion of investment from gas distribution networks, controlled by National Grid.

The regulator believes the proposal will facilitate a more efficient service and that savings will be passed back to customers. Overall, it expects gas bills to increase by just £1 a year.

Chief executive, Alistair Buchanan, said: “Our latest proposals protect customers by requiring challenging cuts in operating expenditure.”

“Overall, the proposals allow the companies to invest £5 billion in delivering a safe, modern gas network while ensuring that costs to customers are kept to a minimum,” he added.

It has proposed two new initiatives to promote sustainability: up to £60 million for research and development into sustainability issues; and an environmental emissions incentive which rewards GDNs for reducing gas emissions. The updated proposal also includes a £68 million contribution for apprenticeships and training.

Final proposals will be released in December.

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