UK Energy Regulator ofgem has set the price limit for the period of 2025 October-December 2025, which will increase the energy bills of households by 2% or about £ 35 per year.
For a typical household that uses electricity and gas and pays per direct debit, the annual energy bills will increase to £ 1,755.
Although this is 2.2% per year higher than the price limit set by OFEM for the same period last year-in the October-December 2024 annual accounts set at £ 1,717 the regulator that the adapted inflation, the cap of this year, makes about 0.9% lower than 2024.
The level of the energy price cap is determined by different costs, including wholesale gas and electricity prices, network costs and VAT; These are divided between the speed of the device and the standing load.
Orgem attributes the price increase for this period to the increased costs of transporting energy in Great Britain, because network operators adjust the costs based on the level established by the National Energy System Operator (NESO).
Other costs that contribute to the CAP include schedules for government support, such as the recently extensive discount of warm houses. Main consultant at Consultancy Cornwall Insight Dr. Craig Lowrey said that the price increase of the price “will feel very real” for households, but that the discount expansion of the warm houses was broadly supported and “a lifeline will be”.
The deputy director of the Energy UK policy (customers), said Ned Hammond: “Although they are usually movements in wholesale energy costs that influence the level of price capitalization, one of the factors behind the increase on this occasion is the expansion of the warm house discount to an additional 2.7 million households.
“However, the government must look at a fairer way to focus on support. The warm expansion of the house discount is a welcome interim measure, but the development of better targeting is the only long-term solution to help those who need it most.”
Renewable energy sources and investments in infrastructure can prevent future price increases
In particular, wholesale prices have not contributed much to the change in the price cap, something that will be seen if the energy system is increasingly supplied by domestic renewable assets, instead of gas imported from abroad.
Orgem has previously noted that although increased generation of renewable energy is less dependent on volatile global fossil fuels, to increase market stability and theoretically lower energy bills, maintenance investments and upgrades are required throughout the system. These changes will increase the fixed costs under the current system.
After the Living Standards Coalition, formed from more than 100 MPs, the government called on the way to ‘overhaul’ the way in which energy bills are calculated in July, orgem An overview of the launch of how costs are allocated throughout the energy system.
The cost allocation and recovery review (Car) will look at the entire energy system of energy generation to household use and explore the considerations involved in different models of cost allocation.
The transmission network cannot currently support high levels of intermittent generation, which prevents the extent in which renewable energy sources can meet demand and reduce the energy bills
By one Report by Analysis Company MontelGroot -Britain has limited a total of 4.6 TWH renewable energy in H1 2025, an increase of 15% compared to H1 2024. A total of £ 152 million was paid to energy generators to compensate them for this restriction, with the costs that are ultimately taken by energy consumers by taxes on accounts.
This means that the electricity grid will have to be expanded and improved; According to the British government, about Twice as many new transmission networks infrastructure is needed by 2030 As has been built in the past decade.
Riio-3 offers £ 80 billion transmission investment
Lowering the transmission costs can be done in various ways. One of them is the Riio-3 price control mechanism, that Offers network companies incentives for innovation and securing investments To develop sustainable energy networks at the lowest costs for current and future customers.
Neil Kenward, director of Strategy, Economics, Research and Net Zero at OFEM, spoke on Solar Media’s Clean Power 2030 Summits. Regulator expects capital investments over the RIIO-3 period of up to £ 80 billionA four -fold increase in current investment levels.
Kenward said: “This financing will finance the building of new high -voltage lines, substations and cables on land and at the sea, which significantly increases the wealth of the scheduling share of GB electricity from renewable sources.”
The System Operation Arm of the Grid, National Grid Electricity Transmission, today (August 27) responded to the proposals of OFGEM and stated that the design provision did not “do not recognize the practical reality of delivering the biggest expansion of the electricity system in more than a generation and the requirement does not recognize two and a half times in our transmission network”.
