Why Energy Bills Are So High in the UK?

Household energy bills in the UK remain much higher than they were before 2021. While electricity rates and fuel prices have fallen from the peak of the energy crisis, many households are still seeing higher costs on their electric bill and gas bill.

There are several common reasons for this. Household energy bills are shaped by global gas prices, how the UK energy market sets electricity prices, government policy decisions, and how much energy an average household uses. Understanding how these factors work together helps explain why bills are still high — and what households can realistically influence.

What has caused energy bills to rise in recent years?

Energy bills rose sharply between 2021 and 2025, largely due to factors outside household control.

Global gas prices and extreme weather

The biggest driver was a surge in natural gas prices following global supply disruption and extreme weather. Because gas is widely used for heating systems, hot water, and electricity generation, higher fuel prices fed directly into household energy bills.

Cold winters and heatwaves across European countries increased demand, pushing up the cost of energy in the short term and affecting electricity costs across the UK.

How much of the increase is linked to gas prices?

Independent analysis shows that around two-thirds of recent electricity cost increases were driven by global gas prices.

Breakdown of recent increases in household energy bills

This shows that most higher costs came from fuel prices rather than renewable energy sources or household behaviour.

Check how your current energy prices compare across the market.

Why does gas affect electricity prices so much?

Many people assume electricity prices should mainly reflect the cost of wind, solar generation, or nuclear power. In reality, the UK uses a system known as marginal pricing.

How marginal pricing works

Under marginal pricing, the most expensive electricity generator needed to meet demand sets the wholesale price of electricity. In many hours, this generator uses gas.

As a result:

• Gas sets electricity prices even when renewables are generating power
• Higher gas prices raise electricity rates for everyone
• Electricity generation costs rise even if clean energy is cheaper to run

Are renewables responsible for high energy bills?

Renewables are often blamed for rising bills, but evidence suggests they are not the main cause.

Cost of renewables compared with gas

The cost of wind, solar generation, and other clean energy sources is typically lower and more stable than fossil fuels. Many renewable energy sources operate under fixed-price contracts, which reduce exposure to volatile fuel prices.

Clean energy and energy security

Increasing electricity generation from renewable energy sources and nuclear power can improve energy security and reduce reliance on global gas markets over time.

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What role do network costs play in energy bills?

Network costs pay for the pipes, cables, and infrastructure that deliver electricity and gas to homes.

Why network costs are rising

• Ageing electricity and gas networks
• Investment needed for heat pumps, electric vehicles, and smart meters
• Managing demand during peak periods

These costs are regulated and shared across household energy bills, regardless of supplier.

How can government policies like the Autumn Budget impact energy bills?

Government policy affects how energy costs are collected, even if it is not the main cause of high bills.

Autumn Budget decisions and household bills

Measures announced in events such as the Autumn Budget can influence energy bills by:

• Moving some clean energy and policy costs off bills and into general taxation
• Funding or removing energy efficiency programmes
• Changing how older support schemes are paid for

Some decisions reduce electricity costs in the short term, while others focus on long-term affordability and system stability.

How the energy price cap affects household energy bills?

The latest price cap limits electricity and gas unit rates on a standard variable tariff.

What the price cap does

• Caps electricity rates and gas prices
• Limits standing charges
• Protects households that do not switch

What the price cap does not do

• It does not cap total bills
• It rises and falls with the wholesale price of electricity and gas

Households paying by direct debit on a standard variable tariff are most affected when the cap changes.

See how your energy tariff compares to today’s rates.

Why some households still have a high electric bill

High household energy bills are not always caused by prices alone.

Household-level factors

• Poor insulation
• Inefficient heating system or water heater
• High hot water use
• Older appliances and incandescent bulbs
• High electricity use from devices such as game consoles

Homes with high energy consumption can still face a high electric bill even when electricity costs fall.

How energy efficiency fits into high bills

Energy efficiency affects how much energy a home needs to buy.

Ways to improve efficiency

• Improve insulation
• Use efficient lighting
• Reduce wasted hot water
• Upgrade heating controls
• Consider a heat pump where suitable

A home energy audit or smart meter can help identify where most electricity and gas are being used.

What can households actually control?

Households cannot control global fuel prices, but they still have choices.

Tariffs, suppliers, and payment methods

• Choosing a tariff that best fits usage
• Reviewing electricity and gas rates
• Checking payment methods

If a supplier fails, customers are protected by the supplier of last resort process.

Compare energy prices to check if your tariff still suits your usage.

Will energy bills come down?

Energy bills may fall if wholesale prices remain lower, but volatility remains possible.

Short-term and long-term outlook

• Short term: prices remain sensitive to global gas markets
• Long term: more clean energy, wind, solar generation, and nuclear power could stabilise electricity costs

Large swings in household energy bills are still possible while gas continues to influence pricing.

Correct as of 02 February 2026

FAQ’s About High Energy Bills