UK Energy Costs Are Climbing Again - Here’s What’s Really Going On

The cost of keeping the lights on, running heating systems, and powering workplaces has climbed sharply once more across the UK. Both households and businesses are feeling the pressure as electricity and gas unit rates continue to rise. Behind these spikes are several market forces, aging tariff systems, and structural changes within the energy sector. This article breaks down what’s happening, why prices keep rising, and the urgent steps consumers and businesses should be taking — including why many brokers such as utility fix are urging customers to review their meters and tariffs now.

1. What’s Going on With Wholesale Prices?

A major driver of the current situation is the wholesale market — the price energy suppliers pay for electricity and gas before it reaches customers.

Recent data from the International Energy Agency shows that wholesale electricity prices in the UK jumped by around 40% year-on-year during the first half of 2025, averaging close to USD 115/MWh. That’s a significant surge, and it sets the tone for what suppliers eventually charge.

2. Why Are Energy Costs Rising So Rapidly?

Gas Remains Central to UK Electricity Generation

The UK still relies heavily on gas-fired power plants. So when global gas markets experience cost increases — driven by supply constraints, demand changes, weather patterns, or geopolitical pressures — electricity prices climb too. The IEA noted that the UK leaned more heavily on gas plants due to lower-than-expected wind output and colder weather early in the year.

Renewables Haven’t Filled the Gap Consistently

While renewable capacity is growing, periods of low wind or reduced solar generation force the system to rely more on gas — the priciest form of generation at the moment.

Gas Prices Have Fallen Slightly… But Not Enough

Wholesale gas prices have eased from their mid-crisis highs, but not dramatically. And because tariffs lag behind market movements, customers still see elevated unit costs. A briefing from the House of Commons Library found that between April 2024 and mid-2025,gas unit costs rose around 4% and electricity around 8%.

Network, distribution, and regulatory charges are rising

Standing charges, infrastructure investment and regulatory costs have all crept up — adding further weight to overall bills.

The bottom line: higher generation costs + higher grid costs = higher tariffs for everyone.

3. The Future of Economy 7, Storage Heaters & Off-Peak Tariffs

If you rely on Economy 7, use storage heaters, or operate equipment at night to take advantage of cheaper hours, you need to act quickly.

Many off-peak tariffs depend on the Radio Teleswitch Service (RTS) — a signal that controls switching between day and night rates. However, RTS is being permanently shut down after 30 June 2025.

According to a detailed guide on UtilityFix’s website:

• Economy 7 isn’t being abolished, but the technology that supports many older meters will stop functioning.
• Without a meter upgrade — usually to a smart meter — customers could lose access to cheaper night rates without warning.
• Some users may be charged full standard rates even during what they believe are "off-peak" hours.
• Businesses relying on storage heating systems or heavy night-time energy usage are particularly at risk.

In other words: staying on a legacy setup could cost you significantly more in the near future.

4. Commercial Gas & Business Energy: Why the Pain Continues

The situation for businesses mirrors the domestic picture but comes with additional complexity.

Business energy contracts are individually priced based on:

• Annual consumption
• Meter type and capacity
• Contract duration
• Region
• Supplier risk calculations
• Market timing

By November 2025, fixed business gas unit rates for small and medium consumption typically sit around 6p–7p per kWh. These rates may look modest compared to electricity, but they’re still higher than historic norms.

Because wholesale markets remain unpredictable, businesses shouldn’t assume that a slightly calmer gas market equals cheaper contracts. Many suppliers are still pricing in risk for the future.

This is why energy brokers — including UtilityFix — encourage businesses to compare multiple quotes, check contract fine print, and avoid rolling blindly into renewal rates, which are often far above market averages.

5. What It Means for Households

The Ofgem energy price cap continues to reflect the broader market pressures. For a typical dual-fuel household:

• The cap rose from around £1,570 (July–Sept 2024)
• To approximately £1,720 under the most recent adjustment

Electricity unit rates rose by about 8%, while gas increased around 4%.

For homes using storage heaters, electric heating, or relying on off-peak tariffs, the hit can be even harder — especially if their meter or tariff structure isn’t compatible with the post-RTS landscape.

If you need to raise concerns or file complaints, suppliers like British Gas can be reached at customercomplaints@british-gas.co.uk, but be sure to have your meter readings, bills, and tariff details ready.

Read More...

Independent leading UK energy broker UtilityFix offers businesses a whole spectrum of utilities management for Commercial Gas and Commercial Electricity. We are a vibrant group headed by experts in their specialty.