The plans, which are to be financed through an 8% rise in transmission prices, are designed to increase security of supply and cut emissions by allowing more low-carbon renewable generation to connect to the grid. Developing new gas import and storage facilities, it is hoped, will also lower prices.

Along with the initial 8% increase for 2006-2007, electricity transmission revenues will then increase by a further 2% above the rate of inflation each year thereafter, while gas transmission revenues will increase in line with inflation.

Ofgem chairman, Sir John Mogg, said: “Investment in the backbone of Britain’s gas and electricity networks is vital to maintain high levels of reliability and secure supplies for customers.”

The news comes as the regulator heralds improving transmission performance across the 14 distribution companies that operate in the country with power cut frequency and duration falling by 17% and 20% respectively over the last four years.

Meanwhile, the first gas has been delivered through the new Bacton -Balgzand pipeline (BBL) pipeline under the North Sea which connects the UK to the Netherlands.

The line will supply 8% of the UK’s gas needs and is the third new piece of gas infrastructure to come on stream this winter.

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