New analysis from the Energy and Climate Intelligence Unit finds that the dual-fuel energy costs for a typical household will have been £4,800 (87%) higher over the five years since the start of the gas crisis in late 2021 through to autumn 2026, with the coming winter likely to add even more to these extra costs.
Across two gas crises, gas bills for a typical household are expected to be around £2,600 (over 100%) higher than in five years before the crisis, with electricity bills more than £2,200 (just under 75%) higher than before the crisis. Government support schemes in 2022 and 2023 (funded by taxation) paid around £1,400 of the extra costs, leaving a typical household paying an extra £3,400 directly on bills.
Wholesale gas costs and their VAT account directly for around £3,600 (75%) of the extra costs for a typical household over the five years, both directly on gas bills and also on electricity bills via gas power plants having high running costs and usually setting the wholesale price of electricity.
Wholesale gas prices began rising in September 2021 and spiked sharply following Russia’s invasion of Ukraine in early 2022. While prices later eased, they never returned to pre‑crisis levels, keeping bills elevated. Now, the war in Iran has pushed gas prices up once again, recently hitting their highest level in three years.
Commenting on the analysis, Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit (ECIU), says:
“Households are being hit by back‑to‑back gas crises caused by wars thousands of miles away. Many families are still carrying debt from the last spike and have little resilience left to absorb further increases, with higher bills expected from July.
“The UK has made major progress in reaching for net zero emissions, getting off oil and gas and rolling out renewables which are now already lowering wholesale electricity prices, helping to stabilise bills by replacing gas power stations. They also strengthen the UK’s energy security by cutting the amount of gas the UK has to import, particularly as the North Sea continues its ongoing decline. Around 90% of North Sea oil and gas has already been extracted [3], a decline that cannot be reversed even with new drilling according to the industry’s own most ambitious estimates.
“But unless the UK speeds up the deployment of electric heat pumps, the UK will be left ever more dependent on foreign gas to heat its homes. With history suggesting that another oil and gas crisis is almost inevitable, more drilling won’t have any significant effect on the price households pay for gas which are driven by international markets and events like wars.”
Knock-on effects of high gas prices have been responsible for much of the remaining £1,200 increase in costs over five years. VAT accounted for around £60. Suppliers’ costs have added around £500, including £200 to cope with volatile wholesale prices and to manage customer debt that increased due to the initial gas crisis.
Network costs added over £530 – almost £200 for gas, and £340 for electricity – with reasons including inflation in maintenance and construction costs triggered by the earlier gas crisis, the costs of balancing the power system being pushed up by gas power plants, and the costs of coping with suppliers being bankrupted by high gas prices.
