Category: Reaction

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.”

The latest analyst forecasts for the Ofgem price cap predict a 1% increase in energy bills from 1 October 2025. This removes some of the reduction in bills seen in July 2025. It means energy bills are 67% higher than in winter 2020/21 and predicted to be £20 more expensive than last winter.

A spokesperson for the End Fuel Poverty Coalition, commented:

“We’re about to face our fifth winter of the energy bills crisis, with the average family still paying hundreds of pounds more than they did just a few years ago.

“If we want affordable, secure energy, the regulator, industry and Government must work together to slash the cost of clean electricity.

“This is even more vital as the North Sea, once seen as the nation’s source of power, is literally running out of gas. Despite what some politicians would have us believe, it simply cannot provide energy for our heating systems in the long term.”

The End Fuel Poverty Coalition is a broad alliance of over 100 anti-poverty, health, housing, climate and consumer organisations working to eliminate fuel poverty in the UK.

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