UK Energy Executives Warn of 20% Bill Rise Despite Falling Gas Prices
Executives from Octopus Energy, E.ON UK, and EDF Energy have warned MPs that household electricity bills could rise by around 20% over the next four to five years — even if wholesale gas prices collapse — as rising network, subsidy, and system costs keep prices high.
The comments came during a 15 October 2025 hearing of Parliament’s Energy Security and Net Zero Committee, where industry leaders said that non-commodity costs — including renewable subsidies, grid expansion, and the cost of balancing intermittent generation — have become the dominant factors shaping electricity bills.
Why Cheaper Gas Won’t Cut Bills
Rachel Fletcher, Director of Regulation and Economics at Octopus Energy, told MPs that non-commodity costs — including grid expansion, renewable subsidies, and flexibility services — now add roughly £300 a year to the average household bill. She explained that even with wholesale gas prices falling sharply, overall electricity costs would remain high because these policy and infrastructure charges are fixed and rising.
Executives from E.ON UK and EDF Energy shared similar concerns. They said that while fuel prices have eased, fixed system charges continue to climb, limiting how much consumers benefit from cheaper wholesale markets. Simone Rossi, CEO of EDF Energy, noted that as electricity demand has levelled off, the system’s fixed costs are now spread across fewer units of power, further pushing up per-unit prices.
£20 Billion in Hidden System Costs
MPs heard that policy and infrastructure charges now exceed £20 billion a year across the energy system. These include subsidies for clean-power contracts, payments to balance the grid, and the cost of reinforcing transmission lines to connect new renewable projects.
One executive told the committee that this burden has “grown piece by piece” as departments introduced new support schemes without overall budget control. “You end up with subsidies for nuclear here, carbon capture there — all good things, but all landing on household bills,” they said. “It’s time we got this under control.”
Several executives urged the government to consider moving at least some of these legacy policy costs — such as feed-in tariffs and renewable obligations — off electricity bills and into general taxation. Others argued that better cost control is needed before shifting where those levies fall.
Officials from Ofgem and National Grid have previously outlined multi-year investment plans that could exceed £80 billion this decade, much of it directed toward connecting offshore wind, storage, and interconnectors. While these upgrades are essential, MPs noted that they will ultimately be financed through consumer bills unless government chooses to fund them directly.
Electrification & the Cost of Clean Power
The discussion tied closely to Labour’s Clean Power 2030 strategy, led by Energy Secretary Ed Miliband, which aims for a fully decarbonised electricity system by the end of the decade. While industry leaders supported the ambition, several cautioned that the pace and financing could add pressure on consumers in the short term.
Opposition parties, meanwhile, argued that the government should reconsider its approach — with some calling for a slower or revised timetable to prioritise affordability. Others urged a review of carbon levies and renewable subsidies, or proposed shifting more of the energy transition’s cost from household bills to general taxation — a move seen as fairer but politically divisive.
Balancing Affordability & Transition
Despite their concerns, executives agreed that major investment in clean generation and networks remains unavoidable if the UK is to cut reliance on volatile global gas markets. “The question isn’t whether we pay, but how and when we pay,” one witness said — summarising the core dilemma of the energy transition.
In the short term, households may face higher electricity costs even as gas prices fall. In the longer term, supporters of the 2030 plan argue that once renewables, storage, and grid flexibility are fully deployed, Britain’s power system will be cleaner, more secure, and ultimately cheaper to run.
For now, though, consumers remain caught between two imperatives: the urgent need to decarbonise and the challenge of paying for it through an electricity system whose fixed and policy-driven costs continue to rise.