Wholesale gas prices have tumbled more than 60% since their 2022 peak, yet the typical UK household still pays roughly £1,900 a year for energy. That gap, between what the market says and what the bill shows, is not an accident. It is the result of deliberate policy choices, regulatory lag, and a billing structure that has quietly shifted risk from suppliers to households.
As reported by The Telegraph, the disconnect between falling commodity prices and stubbornly high bills has left millions of households wondering where the relief went. The short answer: it never arrived because it was never meant to.
What the price cap actually covers
Ofgem’s price cap, which resets quarterly, limits the unit price of gas and electricity but does not cap the total bill. The cap is calculated using a wholesale cost allowance that reflects prices six to twelve months ago. That lag means today’s lower wholesale prices will feed through only gradually, but even when they do, the effect will be muted because wholesale costs now make up a smaller share of the total.
In 2021, wholesale accounted for roughly 40% of a typical bill. Today, according to Ofgem’s latest breakdown, it is closer to 30%. The rest is network charges, policy costs (social and environmental levies), operating costs, and supplier margins. Network charges alone, the cost of maintaining pipes, wires, and smart meters, rose by £45 per household in April 2024 and are expected to rise further as the grid upgrades for electrification.
Standing charges: the silent tax
The standing charge, a fixed daily fee regardless of how much energy you use, has become the most regressive element of the bill. For a typical dual-fuel household, the standing charge now runs to about £300 a year. This fee covers fixed network costs, but it falls hardest on low-income households and those who have already invested in efficiency measures. A home with solar panels and a heat pump might use half the gas of a neighbour but still pay the same standing charge.
Energy UK and Citizens Advice have both called for a review of standing charges, arguing they disincentivise conservation. The government has so far resisted, citing the need for stable network funding. The result is a system where reducing your consumption does not reduce your fixed costs.
What this means for your EPC and your bill
The structural shift in how bills are composed changes the calculus for home upgrades. When wholesale prices were high, cutting consumption by 20% cut your bill by roughly the same percentage. Now, because fixed charges are larger, a 20% reduction in kWh might only reduce your total bill by 12%.
But the arithmetic still works in favour of insulation, solar PV, and heat pumps, especially over time. The Energy Saving Trust estimates a typical semi-detached home can save £300–£400 a year on heating costs by upgrading from an EPC rating of D to C. Solar panels, at current installation costs of roughly £7,000 for a 4kW system, can save £500–£600 a year on electricity bills, even after accounting for standing charges.
The catch is that these savings are now more dependent on reducing your overall kWh consumption than on the unit price. For households on low incomes, the upfront cost of upgrades remains the biggest barrier. The Boiler Upgrade Scheme offers £7,500 towards a heat pump, but only for homes with adequate insulation. The Great British Insulation Scheme closed on 31 March 2026. It funded insulation measures only and never covered windows or glazing.
Who qualifies, and who doesn’t
Households on standard variable tariffs can switch to a fixed-rate deal if one appears cheaper than the cap, but few fixed deals currently beat the cap by more than 2–3%. The real use lies in reducing consumption. Homes with an EPC rating of C or above typically use 25–30% less energy per square metre than homes rated D or E.
For renters, the picture is worse. Landlords are required to meet a minimum EPC rating of E, but the government has delayed the proposed upgrade to C until 2028 at the earliest. The cost of poor insulation is effectively transferred to tenants in the form of higher bills.
What you can do now
First, check your EPC rating on gov.uk. The Great British Insulation Scheme closed on 31 March 2026. It funded insulation measures only and never covered windows or glazing. Second, if you own your home, get quotes for solar PV and battery storage, prices have fallen 40% in five years, and the 0% VAT on installations runs until March 2027. Third, consider a heat pump if your boiler is over 15 years old; the £7,500 grant makes it competitive with a new gas boiler on lifetime cost.
The government has signalled that standing charges may be reformed in the next price cap review, due in February 2025. Until then, the surest route to lower bills is not waiting for wholesale prices to fall, it is cutting the amount of energy you need to buy.
Frequently Asked Questions
Ofgem's price cap is calculated using a wholesale cost allowance that reflects prices from six to twelve months earlier. Additionally, wholesale costs now make up only about 30% of a typical bill, with network charges, policy levies, and standing charges comprising the rest. These fixed costs do not fall when commodity prices drop.
Ofgem is consulting on standing charge reform, with a decision expected in early 2025. Options include shifting more costs to unit rates or introducing a social tariff for vulnerable households. No changes have been confirmed yet, and any reform would require legislation.
