UK Electricity Prices Linked to Gas: Why Bills Are Rising

Energy bills in the UK are rising again after a brief period of stability — and the reason matters if you’re considering electric heating. With UK electricity prices linked to gas, changes in global gas markets can still push up electricity costs, even in homes that don’t use gas for heating.

After a drop in April (to an average bill of roughly £1,641 per year), forecasts suggest bills could rise by around 12% in July. This isn’t just a short-term headline: it highlights a structural issue in the UK energy system that directly affects how electric heating is priced and perceived.

What’s driving the increase in UK energy bills?

The biggest driver is movement in global gas markets. Gas remains a major influence on UK energy pricing — not only for gas users, but for almost everyone.

Because UK electricity prices are linked to gas, rising gas prices can increase electricity costs across the board.

What this means for households:

• Rising gas prices can increase electricity costs

• Most homes are affected, regardless of heating type

• Energy bills remain sensitive to global market changes

This is one reason electric heating can look expensive on paper — even when the electricity being generated includes renewables.

The gap between electricity and gas prices (and why it shapes decisions)

One of the biggest barriers to electric heating adoption is the difference in unit rates:

• Electricity: ~24.6p per kWh

• Gas: ~5.7p per kWh

That gap strongly influences how homeowners compare heating options.

Why this matters

The price difference often creates the perception that:

• Gas is cheaper to run

• Electric heating is always more expensive

In reality, running costs depend on more than unit price alone (insulation, heat retention, control accuracy, and how efficiently heat is delivered). But perception matters — and the current pricing structure reinforces it.

Why are UK electricity prices linked to gas?

In the UK, electricity pricing is often set by the marginal cost of generation — and gas frequently sits at the point where demand is met. In simple terms, even if some electricity is produced cheaply (e.g., wind), the market price can still be influenced by the cost of gas generation.

That’s why UK electricity prices linked to gas is more than a talking point — it’s a core reason electricity can remain expensive even as the grid decarbonises.

Plans to break the link between gas and electricity pricing

The government is exploring reforms intended to reduce how much gas dictates electricity prices.

This includes:

• Reviewing levies and policy costs

• Adjusting how the energy price cap works

• Exploring alternative pricing models

The aim is to create a system that better reflects a lower-carbon grid and supports electrification — including electric heating.

What this means for electric heating

This is a pivotal moment for the future of heating in the UK.

If reforms are successful:

• Electric heating becomes more cost-competitive

• Adoption is likely to increase

• Running cost concerns may reduce over time

If the current system remains:

• The electricity vs gas price gap continues

• Cost perception remains a barrier

• Adoption may be slower, despite long-term policy direction

For homeowners considering electric radiators or smart-controlled electric heating, the key is separating today’s pricing structure from where policy is trying to go.

A transitional moment for homeowners

The UK is in a transition period:

• Short term: electricity can appear more expensive

• Long term: policy direction is clearly towards electrification

So short-term costs don’t always reflect the direction of travel — particularly if pricing reforms reduce the impact of gas on electricity.

Summary

Energy bills are rising again, driven largely by global gas prices. At the same time, the UK is beginning to address a major structural issue: UK electricity prices linked to gas.

In simple terms:

• Gas still drives energy costs today

• Electricity pricing is under review

• Electric heating is expected to become more competitive over time

If you’re weighing up electric heating, it’s worth looking at both current running costs and the longer-term changes that could reshape the market.

Tags: News.