Energy UK published "How to cut bills: A crisis we can't afford to ignore" on 11 March 2025, a report setting out a roadmap for achieving significant bill savings over the next five years1. The industry body said around 40% of customers struggle to afford energy, over three million households live in fuel poverty, and energy debt is running at a record high of around £4 billion1.
The report states that the Government's ability to reduce household energy bills by £300 by 2030 relies primarily on a decrease in international gas prices, over which the UK has no control1. Energy UK said its proposals for policy cost rebalancing alone would deliver up to £400 reduction in annual energy bills for households using electric heating1. It is calling for a National Strategy on Energy Bills led by No.10 or the Treasury1.
"Energy UK sets out a roadmap for achieving significant bill savings over the next five years"
The report identifies removing policy costs from electricity bills, targeted support for customers in fuel poverty, and maximising flexibility in homes as the areas offering the biggest possible bill reductions1. It also points to accelerating critical network connections and changes to the Contracts for Difference scheme as sources of potential savings1. The document is published as a PDF of 497 KB1.
A later Energy UK report, "Clean Heat: Balancing the bill", published on 2 June 2025, expands on the rebalancing analysis2. It states that moving all or some policy costs to general taxation is the fairest approach, though it notes this is likely to prove challenging in the current fiscal environment2. Under a scenario where some policy costs move to taxation, a typical household with electric heating could save up to £400 per year, or up to £550 for those eligible for the Warm Home Discount, while a typical household with a gas boiler would see bills fall by around £92. Under full rebalancing, the same electric heating household saves up to £400, but a typical gas boiler household would see bills rise by around £402.
The second report states that over a 15-year timeframe, full rebalancing would ensure a typical household using an air source heat pump could save up to £7,000 versus a household using a gas boiler2. It adds that targeted energy bill support of between £650 million and £750 million per year would ensure no low- to middle-income households are left worse off, a figure likely to decrease to less than £300 million by 20302.
Why it matters for households
Policy costs are the levies added to energy bills to fund schemes such as renewable incentives and home insulation programmes. Because most of these costs sit on the electricity element of bills, they raise the running cost of electric heating relative to gas, which affects any household considering a heat pump or already using electric heating2. Energy UK states that users of electric heating, predominantly old and inefficient storage heaters, are currently twice as likely to be in fuel poverty as users of gas heating2.
For a household, the practical effect of rebalancing depends on how the home is heated. Energy UK's figures show electric heating users gaining up to £400 a year under the scenarios modelled, while gas boiler households see little change or a modest rise depending on the approach2. The reports also link rebalancing to the running costs of heat pumps and other clean heating systems, and to the standing charges that apply where a home remains connected to the gas network2. Energy UK states that a heat pump household disconnecting from the gas network would avoid the gas standing charge, contributing to the lifetime savings it models2.
The reports frame lower and more stable bills as a question of reduced reliance on international gas prices, which the UK does not control1. Energy UK states that the Clean Power Mission is the only way to permanently achieve bill reductions, but that this will take time1.
What happens next
Energy UK is calling for a National Strategy on Energy Bills led by No.10 or the Treasury to drive change across Whitehall1. The Clean Heat report states that the Government is currently finalising the Warm Homes Plan, supported by a manifesto commitment of £13.2 billion of funding this Parliament2. It states that the Warm Homes Plan should include the continuation of the Energy Company Obligation beyond 2026, and that it assumes the Boiler Upgrade Scheme will be extended beyond 20282. It adds that if the Government pursues rebalancing, it will need to implement the policy no later than April 20272. No decision by the Government on the report's proposals has been reported.
Sources2 cited
- How to cut bills: A crisis we can’t afford to ignore - Energy UK, energy-uk.org.uk
- Clean Heat: Balancing the bill - Energy UK, energy-uk.org.uk