The typical UK household now pays £1,923 a year for energy — nearly double the EU average. That gap is not an accident of geography or weather. It is the result of two decades of policy choices that have left British homes exposed to volatile wholesale gas prices and a clunky market structure that rewards inefficiency. The next person to sit in Number 10 will inherit a system that, as BusinessGreen reports, faces a ‘clear case for reform’ (BusinessGreen).
What reform would mean for your bill
The core problem is how electricity is priced. About 40% of a typical bill goes on network charges and policy costs — the bits that pay for grid upgrades, renewable subsidies, and social schemes. These are fixed regardless of how much energy you use. Ofgem’s own analysis suggests that shifting some of these costs from electricity to gas — or to general taxation — could cut a typical household’s electricity bill by £150 to £200 a year. The catch is that gas bills would rise slightly, but because most homes use more gas than electricity for heating, the net effect for a 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity is a saving of roughly £50–£80. That is not nothing, but it is not the game-changer homeowners need.
Who qualifies — and who doesn’t
The bigger prize is structural reform that makes heat pumps and solar panels cheaper to run. Right now, electricity carries a disproportionate share of green levies — about £170 per household per year — while gas, which is dirtier, pays almost none. This ‘regressive levy’ means that switching to a heat pump, which uses electricity, can add £300–£500 to your annual running costs compared with a gas boiler, even though the heat pump is three times more efficient. The Energy Saving Trust estimates that if levies were moved off electricity, a typical heat pump user would save £200–£300 a year. For a homeowner considering a £12,000 heat pump installation, that makes the payback period drop from 12 years to 8. That is the kind of maths that drives real adoption.
But here is the rub: the next PM may not move fast enough. The current Government has committed to a ‘review’ of energy market arrangements, but no legislation has been tabled. Meanwhile, the price cap is set to rise again in October 2024, by an estimated £63, according to Cornwall Insight. That is another £63 that could have been saved if reform had been in place.
What it costs a typical 3-bed semi
For a homeowner on a standard variable tariff, the numbers are stark. A 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity pays about £1,923 under the current cap. Of that, roughly £770 goes on network and policy costs. If those costs were reduced by 20% — a plausible target for reform — the saving would be £154 a year. Over five years, that is £770, enough to pay for a new boiler or a chunk of solar panels. The EPC impact is also real: a home that cuts its energy use by 10% moves from a D to a C rating, increasing its value by an estimated 5–10% according to Nationwide data.
What homeowners should do now
Do not wait for Whitehall. The political cycle moves slowly; your bills move quarterly. Insulate your loft to 270 mm if you have not already — it costs about £500 and saves £200 a year. Get a smart meter to track usage. If you have the capital, install solar panels: a 4 kW system costs £6,000–£8,000 and saves £400–£600 a year, while improving your EPC by 1–2 bands. The Boiler Upgrade Scheme still offers £7,500 for a heat pump, though you must act before the budget runs out. Apply through gov.uk from April 2025. The next PM may reform the market, but your best hedge is to reduce your demand first.
Frequently Asked Questions
Yes, but the savings are modest. Shifting green levies off electricity could save a typical household £50–£80 a year, while broader network reform might save another £100–£150. The bigger benefit is making low-carbon technologies like heat pumps more affordable.
If your boiler is over 15 years old, install now with the £7,500 Boiler Upgrade Scheme grant. Waiting for reform could save you £200–£300 a year in running costs, but the grant may be reduced or removed. The net benefit of acting now is higher for most households.
