National Grid blasts Ofgem's £22bn energy plan "We believe that these initial proposals will not appropriately incentivise the essential investments necessary to provide safe, reliable networks for the UK consumer and avoid delays to the achievement of the UK's environmental targets," the company said. The financing packages proposed do not, on either a standalone basis or in comparison with other regulatory outcomes, adequately reflect the increased scale of investment and implicit risk associated with the major investment required in the coming years to build the energy system that our customers will need in the future, whether in transmission or distribution infrastructure. The news raises the prospect of National Grid having to cut its dividend, raise capital or sell off assets to access the funding. Ofgem chairman Lord Mogg said: "Britain faces an unprecedented need to invest to replace ageing infrastructure, meet environmental targets and deliver secure supplies. This needs to be carried out at a time of global financial uncertainty, which makes attracting investment difficult but possible. National Grid has been arguing for a 7.2pc cost of equity, but Ofgem hinted that it could demand greater efficiency from the company to deliver the infrastructure at a lower cost. Lord Mogg added: "Through Ofgem's price controls we are driving improvements in company performance to ensure costs are kept as low as possible for consumers by incentivising efficient investment and penalising poor performance. Our "vanilla" weighted average cost of capital of around 4.5pc [6.7pc to 7pc cost of equity] achieves these criteria." The regulator estimated that its proposals will lead to energy bills being £7 higher in 2013, "rising to around a £15 increase in 2021. The average increase on annual household bills across the eight years of the price control is around £11 compared with this year. Final plans are due later in the year. National Grid shares fell 2pc in early trading.