Britain's energy regulator has said that the country's gas distribution networks will be set "challenging cost-cutting targets" over the next five years.
From 2008 to 2013 network operators will be permitted to spend an annual average of £628 million on operating costs, Ofgem said in a statement today.
The figure is 13 per cent lower than distribution networks, dominated by the National Grid, had requested.
But Ofgem said that its updated price-control proposals would help keep customers' bills down.
The energy watchdog said its proposals would allow £5 billion for investment, to allow gas distribution networks to continue a nationwide programme to replace ageing gas mains.
Ofgem has also granted an allowance of up to £60 million for research and to promote sustainability, while also proposing to introduce a new incentive to reward distribution networks that reduce their gas emissions.
A further £68 million has been allowed for gas distribution networks to train apprentices.
Ofgem says its proposals mean the measures will put further pressure on gas distribution networks to operate more efficiently and will result in an increase of around £1 a year in real terms on current gas bills.
Commenting on the plans, Ofgem 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.
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