Author: End Fuel Poverty Coalition

A new report from Greenpeace has exposed just how much control fossil gas still has over our electricity bills. Despite making up less than 40% of our power supply, gas-fired power stations set the market price nearly every half hour — inflating costs for households and businesses alike.

This happens because of the way our electricity market is designed: a system called marginal pricing, where the most expensive generator sets the price for everyone.

A spokesperson for the End Fuel Poverty Coalition, commented:

“This new analysis makes crystal clear what millions of households already feel: the energy market is still rigged in favour of fossil fuel giants.

“Even as renewable generation grows, gas still sets the price of electricity 98% of the time, handing huge profits to energy companies while driving bills higher for households. It’s a structural failure of the market, not a temporary blip.

“The Government’s current strategy is to sit back and hope that marginal pricing will fade as renewables expand. But hope is not a reform plan. Even in a clean system, expensive gas could still set the price during periods of peak demand and households will continue to pay the price.

“Given the failure of the Government’s electricity pricing reform process to deliver meaningful reform so far, new ideas like the one proposed by Greenpeace and Stonehaven to remove gas plants from the wholesale electricity market and place them into a strategic reserve, need to be looked at.

“The electricity market needs structural change, not minor tweaks or warm words.”

Figures have revealed that around 30,000 UK homes were left with insulation so badly fitted it could make cold, damp conditions worse — undermining the very purpose of government-backed schemes designed to cut bills and improve health. The affected homes appear mostly to have been assisted during a period under the previous Government.

A spokesperson for the End Fuel Poverty Coalition, commented:

“It is unacceptable that tens of thousands of households have been left with poor quality insulation which could make cold, damp homes even worse.

“The public put their trust in these schemes to make homes warmer, healthier and cheaper to heat and any issues must be rectified as soon as possible by skilled workers.

“In our recommendations to Ministers for their Warm Homes Plan, we have made it clear that it must provide a ‘warm homes guarantee’ so people are assured that they will get the benefits promised, not just a box ticked.

“This Plan also needs to start with the people in the coldest, dampest homes supported by properly trained installers and rigorous checks. The Minister’s recent confirmation of 9,000 new subsidised training places for installers is a good start to achieving this.

“More broadly, we also need to see area-based insulation and ventilation upgrades, reforms to fix energy pricing and targeted financial help for households struggling with their bills. Without these safeguards, we risk wasting public money, damaging public trust, and leaving millions stuck in fuel poverty.”

The Met Office have confirmed that 2025 has seen the hottest UK summer on record. With overheating in homes making people ill, we are now seeing fuel poverty as a year-round potential health issue.

A spokesperson for the End Fuel Poverty Coalition, commented:

“This has been the hottest summer on record and for millions living in fuel poverty, that heat has been dangerous.

“Too many households are trapped in homes that overheat, with poor ventilation, no cooling and energy bills that are so high that people feel unable to run a fan.

“The reality is that fuel poverty doesn’t end in winter. Overheating is making people ill and tragically it can cost lives.

“We urgently need fairer electricity pricing, targeted support for those most at risk and the Government’s Warm Homes Plan must also deliver solutions that help keep homes cool in the summer.

“The Met Office predicts that with the climate crisis continuing, heatwaves will become more common and more severe. This means that the UK’s housing and energy systems must adapt – or more people will suffer every summer.”

Media reports suggest that the Conservative Party will formally join Reform in pushing for more oil and gas extraction from the North Sea.

A spokesperson for the End Fuel Poverty Coalition, commented:

“The reality is that of all the gas estimated to have been in the North Sea basin, just 14% remains commercially viable according to official statistics.

“Data also show that by 2027, UK gas production is set to fall short of what’s needed just to heat our homes, which currently accounts for 38% of UK gas use. In just two years’ time, more than two-thirds of the UK’s gas needs will be dependent on imports.

“Even if new fields are approved, it won’t be enough to reverse the trend and the UK would still be almost entirely (94%) reliant on imports by 2050.

“Politicians need to heed the clear warning that the North Sea is running out of gas and over reliance on it is a threat to energy security. This has nothing to do with politics or policy — it’s the geological reality after half a century of drilling.”

From 1 January, the EU will introduce its Carbon Border Adjustment Mechanism (CBAM), charging for the carbon embedded in imported goods.

Without a UK–EU agreement to link their Emissions Trading Schemes (ETS), media reports suggest that this could mean higher costs for UK exporters and, indirectly, higher energy bills — as carbon prices feed into wholesale electricity costs.

Linking the ETS would create a larger, more stable carbon market, reduce price volatility, remove the need for a CBAM between the UK and EU, and help ensure a level playing field for industry.

Negotiations are under way, but there are fears a deal will not be reached in time, prompting calls for a temporary exemption or bridging mechanism.

A spokesperson for the End Fuel Poverty Coalition commented:

“UK–EU energy cooperation should focus on how it is able to help bring down bills and boost energy security.

“Linking our electricity systems means British households can benefit from the cheapest power available – such as surplus nuclear from France on cold, still winter days – helping to cut the cost of electricity.

“In addition, experts claim that over time, aligning our carbon pricing systems could help to bring greater stability to the wholesale market. But we need to make sure that household energy bills are not hit in the short term and that the benefits are felt now and not at some vague point in the future.”

Electricity pricing reform is also a key part of this debate. Under the current marginal pricing system, even if cheaper power flowed in from an EU interconnector, consumers could still be charged the higher price set by gas-fired generation running at the same time.

Ofgem has announced that the average household’s energy bill will rise by 2.03% to £1,755 a year from 1 October 2025.

This represents a 2.21% year on year rise and means average energy bills will be 68.43% (£713) a year higher than in winter 2020/21.

A spokesperson for the End Fuel Poverty Coalition, commented:

“Among the hardest hit by the planned price cap rise will be the 12 million households already in fuel poverty.

“It means that average energy bills will remain painfully high and hundreds of pounds a year more than in winter 2020/21.

“In the detail of the announcement is a 14% increase in gas standing charges, while gas unit rates remain almost double pre-crisis levels. And the cost of electricity is also up, which is itself set by the cost of the most expensive generator, usually gas-fired power stations.

“Given that wind and solar are far cheaper ways of generating power and North Sea gas reserves are unable to meet domestic heating needs from 2027, it’s time for action.

“We need urgent reforms to fix the broken pricing system, steps to ensure households benefit from targeted support for cold homes, a nationwide insulation and ventilation drive, reform of energy trading rules and lower standing charges.

“Meanwhile, expansion of renewables and upgrading the grid must be funded through investment or by tackling excess network and energy industry profits, not by loading more costs onto struggling households.”

Eligible households must be named on their electricity bill by Sunday 24 August to receive the £150 Warm Home Discount automatically.

Over 6 million households – including 900,000 more families with children – will benefit this year after the Government removed restrictions that previously excluded many.

Eligible individuals may not be named if they’ve recently moved, changed supplier, or the account is in a partner’s name.

Billpayers in England, Scotland and Wales are eligible if they receive: Housing Benefit, Income-related ESA, Income-based JSA, Income Support, Pension Credit (Guarantee or Savings Credit) or Universal Credit.

• Most will receive the discount automatically.

• In Scotland, only Pension Credit recipients are auto-enrolled – others must apply via their supplier.

• Pre-payment meter users must ensure their account is in their name.

A spokesperson for the End Fuel Poverty Coalition commented:

“There’s many more people set to get the Warm Home Discount this year. But don’t just check you own bill, pass on this information to encourage family, friends and elderly neighbours to check theirs too.

“The expanded Warm Home Discount is a vital lifeline for fuel-poor households. But instead of funding it through the £4 billion in excess profits energy networks pocketed after a regulatory decision, the Treasury chose to pass the cost onto households through bills.”

Ofgem is expected to confirm that the unit cost of gas will fall slightly this autumn, but in winter 2020/21, households were paying just 3.5p per unit for gas. Today, the unit price is 6.33p – almost double – and it’s expected to fall only slightly this autumn.

A spokesperson for the End Fuel Poverty Coalition commented:

“The unit price set by Ofgem doesn’t just include the wholesale price, but also includes supplier costs and the charges caused by an ageing gas network.

“Gas prices don’t just affect gas bills. Under the energy market’s outdated ‘marginal pricing’ system, the cost of electricity is often set by the most expensive form of generation – usually gas-fired power stations. It’s like going to a bar and being charged for every drink as if you ordered the most expensive one on the menu.

“The reality is gas-fired electricity costs around c.£114 per megawatt hour, compared to just c.£41–£44/MWh for solar and offshore wind. Yet consumers are denied the benefits of these cheaper renewables.

“We’ve been urging the Government to fix this broken pricing system – but it’s unclear whether reforms are still on the table.

“Meanwhile, the North Sea is running out of gas. Even if all new fields are developed, the UK won’t produce enough to meet heating demand by 2027. This leaves us increasingly dependent on imports priced on volatile global markets – and concentrated in the hands of just a few companies like Equinor and Centrica.

“The increase to the price cap this time around is partly driven by the expanded Warm Home Discount – a vital lifeline for fuel-poor households. But instead of funding it through the £4 billion in excess profits energy networks pocketed after a regulatory decision, the Treasury chose to pass the cost onto households through bills.”

Ofgem has announced that consumers will see greater levels of compensation in the event of smart meter failures.

A spokesperson for the End Fuel Poverty Coalition, commented:

“We must ensure that electricity pricing is fair and that everyone can access cheaper ‘time of use’ tariffs. Millions of people have been left behind in the smart meter roll out already and it is vital that the energy industry fixes problems with existing meters and compensates customers for failures.

“The main issues with smart meters are when they don’t communicate with the supplier and that is the fault of the Data Communications Company (DCC) and we are concerned that this fault will be exempt from compensation as it could be argued to be outside of the suppliers’ control.

“What’s more, when faults with smart meters are ongoing, it means that even people who want a smart meter may not be able to access from the best tariffs available. This is an issue not one which can’t be dealt with simply by a one off payment.

“And with the North Sea geologically unable to meet our gas heating needs for much longer and the UK set to rely on imports for 94% of its gas by 2050, we must be accelerating efforts to reform electricity pricing, not embedding unfairness. Access to smart tariffs must be universal, and smart meter failures must not become yet another reason why the most vulnerable pay more for energy.”