The average UK household spends £1,100 a year on electricity and £900 on gas. A plan from the thinktank E3G proposes to slash electricity bills by £200 while raising gas costs by roughly £80, a net saving of £120 for most homes. The mechanism is simple: move environmental and social levies off electricity bills and onto gas.
As reported by The Guardian, the thinktank argues that the current system penalises clean electricity, the very thing the government wants households to adopt. The idea is not new. Germany and the Netherlands already shift green levies away from electricity, and UK energy regulator Ofgem has quietly endorsed the principle.
Who qualifies, and who doesn’t
The saving is not uniform. A typical three-bed semi using 3,500 kWh of electricity and 12,000 kWh of gas would see its electricity unit rate fall by about 5p per kWh, while gas would rise by roughly 1.5p per kWh. That works out to a £175 electricity saving and a £180 gas increase, a net loss of £5 for that household. But the E3G model includes a £200 annual rebate for low-income homes, funded by a small levy on gas suppliers. So the poorest households gain most, while those with electric heating (typically older, less efficient homes) benefit disproportionately.
What it costs a typical 3-bed semi
Take a home with a gas boiler and no electric car. Under the plan, its electricity bill drops by £150–£200, but its gas bill rises by £50–£80. Net saving: £70–£150. Now add a heat pump or an electric vehicle. The electricity saving becomes a much bigger win, a heat pump owner could save £300–£400 annually on running costs, because the heat pump uses electricity, not gas. The Energy Saving Trust calculates that a typical air-source heat pump costs £600–£900 a year to run versus £1,000–£1,300 for a gas boiler. The plan would widen that gap by another £150–£200.
The catch, and what it means for your EPC
But the plan has a political problem. It would make gas heating more expensive for the 23 million homes still on mains gas. The government has already delayed the boiler upgrade scheme and watered down heat pump targets. Raising gas costs, even modestly, risks a backlash from households already struggling with bills. Yet the alternative, keeping electricity expensive, stalls the transition to heat pumps and electric cars, which are essential for meeting the UK’s 2050 net-zero target and improving EPC ratings. A home with a heat pump and good insulation can achieve an EPC band C or B, adding £5,000–£15,000 to its sale value, according to estate agent data.
What to do now
The government is consulting on the electricity market reform this autumn. The final decision will come in 2025. Homeowners should not wait. Those planning a heat pump installation can already benefit from the £7,500 Boiler Upgrade Scheme grant, and the running cost advantage will only grow if the E3G plan is adopted. Insulation remains the cheapest first step: cavity wall insulation costs £500–£1,500 and saves £200–£300 a year on gas. The plan is not yet law, but the direction of travel is clear. Act now, not when the policy lands.
Frequently Asked Questions
It depends on your heating system. Homes with a gas boiler and no electric car will see a net saving of £70–£150 a year. Homes with a heat pump or electric vehicle could save £300–£400. Low-income households get an extra £200 rebate.
The government is consulting on electricity market reform in autumn 2024. If adopted, changes could come into force in 2026. The thinktank recommends a phased approach over three years to avoid bill shock.
