Expensive gas drives 90% of UK electricity bill increase, report finds

Expensive gas has driven almost nine‑tenths of the jump in UK household electricity bills, a Carbon Brief analysis shows, with the average bill rising about 30 % in the third quarter of 2024 compared with a year earlier. The rise follows a sharp spike in wholesale power prices that began in early 2024, when gas‑fired generators saw their input costs double as global natural‑gas prices hit record highs. The calculation, based on data from the UK’s power market operator National Grid ESO, attributes roughly 88 % of the bill increase to higher gas prices, with the remaining rise coming from other fuels and network charges.

The surge in gas costs reflects a perfect storm of supply constraints and geopolitical tension. After Russia’s reduced pipeline deliveries in 2022, Europe turned to liquefied natural gas (LNG) imports, tightening the market. A colder‑than‑expected winter in 2023 left storage levels low, and a surge in demand from Asia pushed LNG spot prices above $30 per million British thermal units in early 2024. The UK still relies on gas for about 30 % of its electricity generation, so any wholesale gas price movement is quickly passed on to consumers through the market price cap. At the same time, limited domestic gas production and delayed investments in new capacity have left the market vulnerable to price shocks.

Energy regulator Ofgem said it will review the electricity price cap ahead of its October 2024 deadline, looking at whether additional consumer protections are needed. The Department for Energy Security and Net Zero warned that without faster deployment of renewables and storage, households could face further bill spikes. Consumer groups such as Which? have urged the government to consider temporary subsidies or a targeted relief scheme for low‑income families. Industry analysts say the episode underscores the urgency of decarbonising the power sector and expanding offshore wind, nuclear and battery storage to reduce reliance on volatile gas markets. The next few months will reveal whether policy adjustments can blunt the impact of high gas prices on everyday electricity bills.