Why is my energy bill so high?

Recorded at the Battle of Ideas festival 2025 at Church House and the Abbey Centre, Westminster, on Saturday 18 October.

ORIGINAL INTRODUCTION

Heating or eating? That has become a burning question for many people. From struggling households to steel works and factories, energy prices remain a hot topic. Ed Miliband’s assurance that bills would fall by £300 per year looks wildly optimistic.

The cost of energy bills became a major political issue when a combination of a post-pandemic resurgence of the world economy and war in Ukraine sent the price of energy in general, and natural gas in particular, shooting up. Prices have come down a lot since then, but remain higher than before. The Ofgem energy price cap for a ‘typical household’ increased from £1,137 per year in January 2019 to £1,720 in July 2025 – a rise of over 50 per cent.

Supporters of renewable energy argue that the UK is still at the mercy of global prices for gas because ‘gas sets the price’ in the energy market, thanks to the way the ‘merit order’ works for wholesale energy prices: the most expensive form of energy that is used sets the price for everything. Generally, that is gas. Get rid of fossil fuels, we are told, and we would have lower prices and less exposure to world markets.

However, critics point out that the wholesale price is only part of the story. The retail price of energy includes a variety of subsidies for renewable energy that mean the actual price renewable producers receive is much higher. If renewables are really as cheap as their proponents claim, why do they need to be subsidised and why do countries that use a lot of renewables also have the highest energy bills? Will prices rise further as we use even more renewables? And if energy security is so important, why would we want to rely on intermittent energy sources like wind and solar?

In this session, energy experts will explain how our energy bills remain so high and what the consequences are for household finances and the wider economy.

SPEAKERS
Lord Mackinlay
director, The Global Warming Policy Foundation

Kathryn Porter
consultant, Watt-Logic

David Turver
energy policy analyst, Eigen Values

CHAIR
Rob Lyons
science and technology director, Academy of Ideas; convenor, AoI Economy Forum; author, Panic on a Plate