• On Wednesday 27th May, the energy regulator Ofgem announced a large increase in the energy price cap, which will see bills increase by over £200 for the typical price cap household from July 1st.

• The Electricity Bills Taskforce, a coalition of consumer groups, businesses and academics, argues government could be doing more to reduce energy bills and cancel out the impacts of the global oil & gas price spike. 

• The taskforce has developed a range of options for reducing energy bills. Echoing our own calls for this, their top recommendation is to remove government levies from electricity bills. 

• This could mediately reduce household bills by over £120 per year, and reduce business energy costs by over 20%. 

Levies’ impact on bills 

• Government levies currently increase energy bills by over £11bn per year for business and domestic customers. 

• Moving levies off bills would immediately save average household around £120 a year, and cut business energy costs by over 20%.  

• Cutting the cost of energy through levy reform could reduce inflation by 0.3 percentage points, according to research by Nesta. 

• In the 2025 Autumn Budget, the Chancellor partially and temporarily moved some levies off household electricity bills, delivering savings of £154 per year for the average household.  

• However, levies still account for nearly 10% of the domestic electricity bills – and make up over 20% of energy costs for businesses, most of which have received no support at all. 

• The discount announced by the Chancellor is set to expire in March 2029, setting up the potential for further bill rise before 2030 without further action.   

Taxes on electricity are making fuel poverty worse 

• The amount charged in levies on household electricity bills is more than double the levies on gas. Households that rely on electricity for heating are twice as likely to be in fuel poverty, and pay a disproportionately higher share of their income on levies than dual fuel households.  

• Levies disproportionately affect the most vulnerable, with some low-income groups spending more on levies than on basic foods like bread, rice and cereals. 

Expert commentary from The UK Electricity Bills Taskforce  

Chris Galpin, Senior Advisor at E3G, said: “Fully removing levies from electricity bills would save the average household a further £120, and reduce business energy bills by a massive 20%. If government is serious about tackling the cost-of-living crisis, removing these unfair levies needs to be the first step.”   

Dr Garry Felgate, CEO of The MCS Foundation, said: “Cutting the cost of electricity must be a priority for the Government if it is to tackle the cost of living crisis and ensure more households can benefit from being carbon free. Permanently moving remaining levies off electricity and into general taxation would be a positive step in that direction. It would especially benefit those most likely to be facing fuel poverty, as well as encouraging the shift towards cleaner, home-grown energy.” 

Sue Davies, Which? Head of Consumer Protection Policy, said: “We are urging the government to remove all environmental and social levies from energy bills and fund them instead through general taxation to better support households through the cost of living crisis. Removing these levies would offer support to all, while delivering the greatest benefit to electrically-heated households, who are twice as likely to experience fuel poverty. It would also support the transition to more sustainable technologies, such as heat pumps and electric vehicles, by reducing electricity costs.”  

Arjan Geveke, Director at the Energy Intensive Users Group, said: “The levies on electricity prices are contrary to value for money and damage the competitiveness of British industry, deter business investment and undermine economic growth. Exempting certain business from these levies helps those who are eligible though merely shifts the economic damage to other consumers. These levies should never have been put on electricity bills and should be moved into general taxation”.  

Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The Government must look at every option to bring down bills and removing levies is a relatively quick win. But Ministers must not throw the baby out with the bathwater. The Warm Home Discount is the only permanent energy cost support measure for low-income households and must be enhanced to address the coming energy bill price increase. The new ask is simple, fund the Warm Home Discount through progressive general taxation, not via everyone’s energy bills.”   

Ed Hezlet, Energy Analyst at the Centre for British Progress, said: “The UK needs to electrify to improve its energy security in the long run – but electrification is being held back by high prices. We need continued action on legacy policy costs in the electricity system to support households in the energy transition” 

Andy Hackett, Head of Policy at Centre for Net Zero, said “Addressing the levy burden on electricity is the single biggest lever the government has to get bills down in the short term. Beyond cutting the unit cost of electricity, it reduces distortions that stop consumers benefiting from cheap renewable power when it’s abundant. The current system is becoming increasingly hard to justify.” 

Matt Isherwood, Aira UK Managing Director, said: “The cost of electricity is the biggest barrier to scaling clean energy tech adoption and lowering energy bills in the UK. The Government is encouraging electrification and targeting 450,000 heat pump installations a year by 2030, yet electricity remains disproportionately expensive compared to gas. Intelligent technology is already helping households to cut energy use and lower bills, but to increase accessibility and tackle the cost-of-living at scale, the Government must reform levies. Rebalancing these away from electricity will help accelerate the transition, give people greater confidence to invest in heat pumps and other clean energy tech solutions – and vitally, lower household energy bills.”   

Dena Barasi, Head of Policy Regulation and Advocacy at E.ON UK, said, “The case for electrification has never been stronger, with recent global market volatility demonstrating the UK’s ongoing exposure to fossil fuels and the requirement for energy security. Moving legacy policy costs off electricity bills would help bring costs down, offer more stability and make cleaner, homegrown energy the most affordable option. Pair that with the beneficial impact on flexibility, so customers can take control through smarter tariffs, solar and batteries, and we can accelerate the shift to clean power and make new energy work for everyone.” 

Sarah Mackintosh, Director at Cleantech for UK, said, “With the price cap rising again, rebalancing policy costs on electricity would improve the economics of cleantech deployment in the UK, helping to unlock private investment, support scale-up and contribute to economic growth.” 

Matt Copeland, Head of Policy and Public Affairs at National Energy Action, said, “The biggest difference between this price crisis and the last is the significant sum of energy debt that has built up between them. More than £5 billion in energy debt has built up, and everyone is now paying the price through higher bills. 

“Clearing that debt is not just about helping households who are already struggling, it is about bringing costs down for all of us. Taking action could save families between around £50 and £70 a year, while lifting a huge weight off those trapped in debt cycles. If we are serious about a fair energy system, we cannot ignore the debt sitting inside it.” 

Charlotte Lee, Chief Executive, Heat Pump Association UK, said: “The UK cannot accelerate the transition to electrified heat while electricity remains disproportionately expensive compared to gas. Shifting levies off electricity bills would remove the single greatest barrier to heat pump adoption, giving households and businesses confidence to invest in cleaner heating. It would accelerate the move away from volatile imported fossil fuels towards efficient, homegrown energy sources that strengthen the UK’s energy security, lower emissions, and support long-term affordability.” 

Spencer Lamb, Managing Director & Chief Commercial Officer, Kao Data, said: “Data centres are the engine rooms of the digital age — powering the AI, healthcare, finance and public services the UK relies on every day. If we want Britain to lead in digital and AI, we need internationally competitive electricity costs. Moving legacy policy levies off electricity bills and into general taxation is a pragmatic step that supports growth, investment and jobs, while enabling operators like Kao Data to keep driving efficiency and clean power procurement.”