Britain's Energy Bills Are Staying High, and Nobody Will Say Why

Another Ofgem price cap day, another increase. Bills rise 4% from October, putting households at the highest cap in three years on a unit basis, and the new energy secretary can point to the familiar culprit: the fossil fuel price rollercoaster, given a fresh shove by conflict in the Middle East.

That explanation is accurate as far as it goes. Higher gas prices are the main quarter-on-quarter reason bills are where they are. It is also, on any longer view, radically incomplete.

The number that should worry ministers

Even when the gas rollercoaster dips, the industry's own medium-term projections suggest bills will not fall meaningfully.

EDF, one of the largest retail suppliers, published a forecast this week assuming "some moderation" in wholesale prices. Its top line: "Bills still look stubbornly high at the end of the decade." Against an assumed £1,721 cap for the final three months of 2026, the company projects £1,786 in 2030.

That is not a fall. It is a small rise, four years out, on optimistic wholesale assumptions.

The figure would be roughly £90 lower if the government extends VAT relief on electricity and continues moving a portion of older green levies into general taxation. Either way, the previous energy secretary's pledge of "£300 off bills by 2030" is not operative in any version of these numbers.

Businesses and households need to know what will happen to the price of electricity to judge whether switching to a heat pump makes financial sense. Photograph: JulPo/Getty Images

Why the forecast can be trusted

EDF can be reasonably confident in its projection precisely because less of the bill is now driven by the volatile part.

An increasing share is made up of what the industry calls non-commodity costs: charges for running and upgrading the gas and electricity grids, price contracts for wind and solar generators, carbon taxes, the cost of the warm home discount for vulnerable households, and more. On the electricity side, the wholesale element is now just 30% of the bill.

That is a structural shift with an underappreciated consequence. The portion of your bill that responds to global gas markets is shrinking, and the portion set by long-term infrastructure commitments is growing. Falling gas prices therefore deliver less relief than they used to.

The immediate pressure is the transmission network, and the roughly £70bn programme to relieve constraints and connect new generation to the grid.

The case for saying so out loud

EDF paired its projection with a call for greater transparency on future costs, and it is right. It is genuinely odd that Ofgem does not publish medium-term forecasts to give customers a rough sense of what to expect.

The usual excuse is that absolute precision is impossible. That is true and beside the point — EDF managed a credible estimate, and every serious participant in the market builds one internally. Refusing to publish does not make the future less certain. It makes the public the only party without a view of it.

The stance also carries a cost to the regulator's own standing. An independent body that declines to publish an uncomfortable number starts to look politically captured rather than independent, which is the opposite of what Ofgem needs.

The decisions people cannot make without it

This is not an abstract argument about disclosure. Households are being asked to make expensive, long-lived choices — a heat pump, an electric car, a home insulation programme — whose economics depend entirely on the price of electricity over the next decade.

Without a published trajectory, every one of those decisions is a guess. A household weighing a heat pump against a replacement gas boiler is implicitly forecasting the electricity-to-gas price ratio to 2035, and has been given nothing official to work from.

Openness would also let everyone see where the pressure is actually coming from, which is the necessary first step to arguing about whether it is being spent well. The energy transition is expensive in the short and medium term, and is probably getting more expensive. Saying that plainly is not a political defeat. Refusing to say it, while the bills arrive anyway, is.