I shocked MPs by warning energy bills would rise 20%. Here’s why

Unless we change course, British household electricity bills could be 20% higher than today in five years.

That was my verdict to MPs in mid-October, at a special government committee hearing. A stark conclusion that was echoed by two other major suppliers in the very same session: EDF and E.ON.

My comments were reported all over the news and seized on by politicians from across the spectrum. So much so, the government has since intervened to help get energy bills under control, announcing a small collection of measures in November 2025, as part of the national autumn Budget.

I think it’s important we’re transparent with our customers, so I’m going to explain how we came to this conclusion - and how the outlook has changed since we first raised this flag three months ago.

The headline?

Major UK energy suppliers expect electricity prices to rise meaningfully over the next 5 years.

This is because, without significant changes in our market set-up, increases in what we call “non-commodity costs” (these are network costs, system balancing costs and policy levies - all explained below) will more than offset expected reductions in wholesale cost of energy.

This is roughly how your electricity bill breaks down.

We’re worried that current policy approaches (how we balance the electricity system, plan and fund grid upgrades, and manage and recover policy costs/levies) - are not fit for purpose and need to change.

Without change the government risks making electricity more unaffordable, further damaging growth and causing unnecessary hardship for households.

If electricity prices are too high it will slow down the adoption of EVs and electric heating, and we may find we have spent billions of pounds expanding the system far beyond what is required to meet demand.

Here is a chart on how we expect bills to change.

It shows that in 2030, for the same amount of electricity, a household could be paying as much as £135 extra per year, an increase of up to 15% in real terms from 2024 levels.

It shows that increases in balancing costs, network costs and policy levies each have the potential to add up to £90 or more to the bill. This could be offset by around £135 reduction in wholesale costs.

This is a slight improvement on the figures we originally presented to the Government. This is largely due to the measures announced in the Autumn Budget. The Government has now decided to scrap the Energy Company Obligation scheme, reducing our bill projection by around £30 in 2030.