Ofgem has approved £24.2 billion to upgrade and renew Britain's electricity and gas networks over the next eight years, the regulator announced today. That represents a £7 billion cut to the network companies' original spending plans.

Of the allowance made under new price control method RIIO, £4.5 billion is subject to further justification from the companies being accepted by Ofgem. Operational costs bring the total package up to £38.2 billion, slightly higher than the £36.1 billion Ofgem initially proposed.

The initial proposals in July sparked a war of words, with National Grid saying the regulator had failed to “appropriately incentivise” essential investment. Ofgem chief executive Alistair Buchanan in turn accused the network company of “not doing its homework”.

If the companies are unhappy with their settlement, they can trigger a referral to the Competition Commission.