- Energy UK says reducing our reliance on international gas is only long-term solution to cut bills
- Achieving significant bill reductions over 5 years will require a step change from government
- If electricity was cheaper, there will be far more incentive for customers to switch to low-carbon tech
The Labour government needs to take urgent action if it is going to hit its pre-election target of cutting energy bills by £300 by 2030, removing levies on electricity bills, according to a new report by Energy UK.
In its report, ‘How to Cut Bills: A crisis that can’t be ignored’, Energy UK said ministers had not set out a pathway to achieving significant bill reductions this Parliament and that bill payers are currently vulnerable to volatile energy markets, claiming that reducing our reliance on international gas is the only long-term solution.
Dhara Vyas, chief executive, Energy UK said “being at the mercy” of events, like Russia’s invasion of Ukraine makes gas prices highly volatile, resulting in record energy bills and leading the government to spend £100bn to support homes and businesses.
“Although bills have fallen from that peak, they remain 34% higher than before the crisis and customer debt stands at a record near £4bn,” Vyas explained.
“While the Clean Power mission will ensure lower energy bills in the next decade, its effect is unlikely to be meaningfully felt by 2030.”
Vyas said relying on a decrease in international gas prices – over which the UK has no control over – is not the solution to getting bills down.
There has been some kind of intervention, however. These include expanding the Warm Homes Discount, introducing a debt relief scheme and work on data matching to target help and support.
But, Vyas said achieving “significant bill reductions” over the next five years will require a step change from the Government. As a result, Energy UK is calling for a National Strategy on energy bills, led by No.10 or the Treasury, to drive change across Whitehall and deliver on this promise.
Energy UK has outlined a range of potential savings, such as by accelerating critical network connections and changes to the Contracts for Difference scheme.
Vyas added that the biggest possible bill reductions will come from removing policy costs from electricity bills, providing targeted support for customers in fuel poverty and maximising the potential of flexibility in homes.
He said that moving policy costs – levies on bills used to fund social programmes – from electricity to gas, and funding a small amount through general taxation, could lead to bill reductions of up to £400 a year for homes with electricity heating, while guaranteeing that no households see an increase in costs.
Additionally, with electricity no longer artificially expensive, there will be far more incentive for customers to switch to electric vehicles and heat pumps.
“Clean power is the only way to permanently deliver both energy security and stable, affordable bills, but the benefits are some way off. Energy customers have faced high bills over recent years so it’s only right that the ambition to reduce energy bills by 2030 should now be prioritised in the same way,” Vyas said.
“With pressure on the public finances, difficult decisions and political leadership are necessary if we are to achieve the scale of bill reductions the government is targeting.
“Lower energy bills have the potential to power growth and prosperity across the country and industry is ready to work with the government on making this a reality.”
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Heat pumps heats your home throughout the year, when it's needed. Our trusted suppliers can offer free quotes on the costs to install one.
What are the energy bill changes you need to be aware of?
From April, the price of electricity will increase to 27.03p per kWh for electricity and 6.99p per kWh for gas.
Households also pay a daily standard, which will be 53.80p for electricity and 32.67p for gas from April. All pricing increases are inclusive of 5% VAT.
Overall, a typical household will be paying £111 more a year for their energy bills, or an additional £9.25 a month.
Although a little confusing, the actual rates you’re charged will depend on where you live, how you pay your bill and the type of meter you have.
For example, in the North West, your unit rate from January to March 2025 is currently 25.36p per day, and will increase to 27.93p per day per kWh. This is an increase of 50p higher than the national average.
For a full list of your region, check out the Ofgem website or our guide on What’s the price of electricity per kWh right now?
H2: Low-carbon technologies can help reduce your bills
According to the National Home Energy Survey 2024 by The Eco Experts, more than half of homeowners cite reducing their energy bills as a key motivator for adopting low-carbon technologies (LCT).
The most-common forms of this include:
- Solar panels
- Heat pumps
- EVs
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Solar panels can help reduce your energy bills, and our trusted suppliers can help by sending free quotes and guide you through the process
The challenge to uptake with LCTs is the high upfront cost, but there are government incentives to help lower this. These are:
- Boiler Upgrade Scheme
- ECO4 Scheme
- Warmer Homes Scotland
- Nest – for households in Wales
- Warm Homes Local Grant
Some installers also offer finance options to help spread the upfront costs.
What can you do if you’re struggling?
If you’re struggling to pay your energy bills, the first port of call should be to contact your energy supplier.
You can ask about a payment plan that works for you, ask about any hardship funds or ask if you can pay smaller amounts more often.
Also check to see if you qualify for any grants or schemes from your local authority. Some charities have hardship funds, too. You might also qualify for benefits.
