Wholesale gas costs blamed for rises in household energy bills
Rise in UK electricity bills driven by gas prices
- New analysis by the UK Energy Research Centre (UKERC) reveals that wholesale gas prices are responsible for two-thirds of the increase in household electricity bills between 2021 and 2025.
- Typical electricity bills surged by £169 in real terms during this period, with network costs and policy costs also contributing to the overall rise.
- Despite gas accounting for only a third of electricity generation, its price influences the cost for up to 90 per cent of generation, leaving billpayers vulnerable to price shocks.
- UKERC suggests that shifting older renewable generators to fixed-price contracts could save between £2 billion and £8 billion annually, with increased renewables projected to reduce wholesale electricity prices by 8 per cent by 2029.
- The report also highlights the need for smart meters and careful management of the transition away from gas to prevent high costs for vulnerable customers and address future gas network liabilities.