A 6.4% increase seems quite high. At least it’s milder and the sun is out to help with solar gain and solar production. 

Yes @jeff and @kilowatts_io you're largely correct

It's a Cap and Flaw arrangement based on the revenues accrued by National Grid Group for operating the link.
However, that income is obtained by charging Generation and Storage customers per MWh that they put through the interconnector.
That increases the price of electricity on the European wholesale market.
So it does have a knock-on effect on the consumer price.

In April'23 National Grid "paid back" £100m which they accrued above the Cap,
in addition to the £200m which was already due.

I have yet to find out where that money goes, and whether it is ring-fenced to benefit those of us who are paying for UK-based infrastructure upgrades.

I should point out that whilst those sums may seem huge,
they are well under 10% of the revenue being earned by the NSL owners.

UK has an underlying principle of "No taxation without representation".

But that doesn't seem to be applied to the Energy Sector.

Ofgem is facilitating Agreements which allow British energy prices to rise,
whilst consumers have no voice in NESO or the forthcoming RESPs.

May I point out that, although I get invited to public consultation meetings held by companies in the National Grid group,
and I have direct communication with scores of their staff,
the financial side of things is not my forté.

Those 'briefings' are largely attended by representatives from Local Government, utility companies and academics.

My role tends to be that of challenging the ethics of decisions,
and daring to stop the speakers to ask technical questions!

I really need others here to pick up aspects of pricing and drill down to find the detail.

Another price cap rise, another neat little 2% hike in electricity bills from October, spun as if it’s nothing, “just £2.93 a month” for the average household. The problem is that this isn’t just £2.93 is it? It’s yet another example of how the regulator is pushing up the cost of electricity at the same time we’re being told to rip out our boilers, fit heat pumps, buy EVs and electrify everything.

The spin is insulting too. Wholesale prices, by Ofgem’s own admission, are stable and have even fallen 2% over the past three months. Yet bills are rising. How does that add up? The justification is a grab bag of balancing costs, policy costs and network charges, none of which have anything to do with the actual cost of generating electricity. Balancing costs alone add £1.23 a month, the Warm Home Discount extension adds £1.42, gas network costs another 72p. So households pay more not because electricity is more expensive, but because Ofgem insists on loading every systemic inefficiency and social policy directly onto bills, and specifically onto electricity.

Meanwhile, Tim Jarvis from Ofgem trots out the usual soundbites about a “healthier market,” more people switching, customer satisfaction going up. Healthier for who? Not for households already hammered by some of the highest electricity prices in Europe. Not for the homeowners who’ve done the right thing by moving to heat pumps, only to find their running costs punished by a price structure that makes gas look artificially cheap. It is corporate gaslighting to claim progress while ratcheting up the price of the very energy vector we need to lean on to hit net zero.

Ofgem also proudly trumpets provisional approval for £24 billion of grid upgrades. Necessary? Absolutely. But again, households foot the bill through higher tariffs. At the same time, tucked away in the notes, they admit they’re consulting on how to recover the costs of the Sizewell C nuclear project through the price cap. So households are being squeezed twice: once to pay for today’s system failures, again to bankroll future megaprojects that won’t deliver electricity until the late 2030s, if at all.

Electricity is treated as a dumping ground for every cost the system doesn’t know how to manage (balancing, subsidies, debt relief schemes, network inefficiencies, nuclear fantasies) while gas remains cheap and relatively untouched. Every credible analysis says the same thing: if we want homeowners to adopt heat pumps, electrify their cars and ditch fossil fuels, electricity has to be cheaper than gas. Yet here we are, hiking electricity costs again, while continuing to shield gas.

This is why I’m pissed off. I spend my time urging homeowners to switch to heat pumps, to trust the technology, to look past the scare stories. And what do they see? A regulator that keeps making electricity more expensive, while gas stays comparatively cheap.

It’s not just bad policy, it’s sabotage imo. It undermines confidence in heat pumps, makes electrification look unaffordable and gives every sceptic fresh ammunition. People look at their neighbours with gas boilers paying less per kWh (given the national heat pump SCOP average of 2.7) and wonder why they should spend thousands on a heat pump. And right now, I don’t have a good answer for them, because Ofgem has decided to make the clean option the expensive one, again!

The government talks about net zero, about 600,000 heat pump installs a year, about decarbonising transport and heating. But until electricity is priced sensibly, those numbers are fantasy. Households will not switch en masse while the regulator is stacking the deck against them.

As I've said many times..

Where Electricity prices are still 4.2x the price of Gas - there is no justification to pay £1000's more on installing a Heat Pump.

I speak to many interested in Heat Pumps where the conclusion is usually installing Solar / Batteries and Air Conditioning instead.

Just signed up a guy with 10kw Solar PV, 30kwh of Batteries and a multisplit AC for a total of £13,600 all in.

Not only is he on mostly free Summer electricity, he is switching to Economy7 for 14p electricity overnight.

We heated our own house with AC over Winter at a cost of £29 per month using AC against £130 Gas.

We have just fitted a brand new boiler - why? I don't trust electricity supply with threats of Blackouts and there may be days it's too cold to run AC, so will have Gas to fall back on. I'd rather run a boiler from batteries during a Blackout than try maintaining a Heat Pump.

A 'Hybrid' system saving us a fortune with inbuilt resilience.

We run 65kwh batteries at home, buy all our Electricity overnight at 12p per kwh and recommending EDF to 6x friends and family for £50 - pay just £9.60 per month Direct Debit.

EDF will be offering Sunday Saver iver Winter as they did April / June and July with no limits giving us a chance of 16hrs on a Sunday to charge EV, charge up to 65kwh to batteries, washing, drying, dishwasher and cooking where each Sunday we pulled up to 120kwh of free Electricity.

Solar and Free EDF Sundays has provided us 95% of our Electricity since last week of March.

So - until Electricity prices fall in 2040, Heat Pump cost viability is very doubtful. Why buy into an installation with 40 to 60yr payback if lucky?

There are other ways to Heat for cheap, Air Conditioning via batteries loaded with 12p electricity gives us heating at equivalent of 2.8p/kwh.

Last few heatwaves, cooling the house to 20'C has consumed less than 4kwh per day provided by Solar.

It's not the price of Electricity that's the issue, it's the link to the price of Gas generated Electricity and failures of government's to install the 14x Nuclear power stations Tony Blair banged on about in 2006 as well as failures to upgrade the Grid and install more Wind into the mix. Thus countries chronic lack of Gas storage gas significant bearing as no longer able to buy and stock up when prices fall - although they haven't fallen the last 12 minths.

Autumn is heading quickly towards us, energy bills is neither a worry for us nor the people I work with for solutions without the cost of an A2W.

@editor there is a real political peril changing where the levies fall.  If they were shifted to gas the majority of the population would end up paying more.  This would be an absolute gift to those who are opposed to carbon reduction policies, and risks the abandonment of the whole carbon reduction policy after the next election.  I can see why the government might be reluctant to make this seemingly obvious switch, both for party political reasons and in the long term interest of the environment. IMHO it needs something more subtle but I don't have a solution.

I’ve been digging into the numbers from our own house to illustrate just how broken UK energy pricing is when it comes to heat pumps.

Using our electricity consumption for heating between 18 Sept and 18 Dec 2024, our system used 3,239 kWh of electricity, generating 10,136 kWh of heat. This was a relatively mild period too.

With an electricity tariff of 27.2p/kWh (our tariff today), that period would have cost £880 in running costs.

With the new tariff (31p/kWh), the same period would cost £1,155.

If we’d heated the house with oil over that same period (priced at the 50p/litre we’ve consistently paid for nearly 7 years), the cost would have been just £545.

And here’s the real kicker:

To reach cost parity with oil at 50p/litre, our heat pump would need a COP of 5.1 on 27.2p/kWh

On the new tariff, it would need an impossible COP of ~10.8.

This is why people continue to choose fossil fuels... not because they don’t care about the environment, but because the economics simply don’t stack up.

We can’t expect homeowners to take the financial hit while policy and pricing structures lag behind. Money talks. The planet takes a back seat. And that’s the reality of the current “heat or eat” equation.

Posted by: @editor

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With an electricity tariff of 27.2p/kWh (our tariff today), that period would have cost £880 in running costs.

With the new tariff (31p/kWh), the same period would cost £1,155.

You should seriously look at better tariffs.  I pay an average of 19p against a standard tarrif in my area of 26.5p

However I nevertgeless agree with the thrust of what you are saying but for the reason above don't think it's quite as simple as it first appears.

Why hide it with dedicated tariffs for Heat Pumps to make running 'look cheaper'.

Subsidised installation AND running costs isn't sustainable.

Sobering thought..

Were only 7p per kwh from Crisis '22 prices where government gave us all £400.

"You can bring a frog to the boil and it feels nothing, drop a frog into hot water and its chaos!!"

Everyone's scenario is different according to setup, usage... and ability to get the best from time of use tariffs.

For example in our case with an EV and solar + batteries we can get imports to average sub 10p/kWh. 

Makes comparisons sooooo hard.

By maximising cheap overnight imports... maximising solar exports .. plus forced exports... and with this exceptional summer we may get close to net import cost to zero for this year. Anything under £500 will be great!

@diverted-energy I think your “subsidied tariff” statement is incorrect. The range of tariffs offered by, for example Octopus, are there to balance the varying rate of electricity thru the day/night. I’m an electric house. On Octopus Intelligent Go. New rates aren’t announced, but I pay 27p & 7p/kWh. So you do shift your usage. 
I also don’t think it’s an either/or for solar PV and ASHP. We went solar first, added a hp 9 years later. 
I do agree the disparity between gas and electricity prices drives fossil fuel usage and this needs to be very gradually rebalanced. 
@editor I don’t think it’s reasonable to multiply the full electric price x your usage and compare to oil. Surely you are on some sort of flexible tariff?  Oil is 53p/L currently. Very low. We used to do a one time annual buy in the summer, but not everyone’s tank is large enough. 
We need to look for solutions and suggest options to encourage ASHP take up. My mother-in-law has her octopus installation starting on 1st September. She will switch to Octopus Cosy tariff. Gas hob removed, her gas meter will be taken out, saving the standing charge.

Posted by: @diverted-energy

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Why hide it with dedicated tariffs for Heat Pumps to make running 'look cheaper'.

Actually there would be a good logical case for this.  Currently the policy costs (which are entirely loaded on electricity). fall on everyone whether or not they have a heat pump, ev or solar.  There is a clear moral case to exempt those people!  It's not subsidising per se, it's adjusting tax to reflect the individuals actions or applying the polluter pays principle

Still a risky political move (see my post above) but also more difficult to criticise.  There might just be something in this.

Posted by: @jamespa

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Actually there would be a good logical case for this.  Currently the policy costs (which are entirely loaded on electricity). fall on everyone whether or not they have a heat pump, ev or solar.  There is a clear moral case to exempt those people!  It's not subsidising per se, it's adjusting tax to reflect the individuals actions or applying the polluter pays principle

 

Still a risky political move (see my post above) but also more difficult to criticise.  There might just be something in this.

Good argument. I have long been of the view that some of the policy costs should be shifted away from electricity and onto gas under the polluter pays principle, otherwise it's very difficult to incentivise people to move from cheaper gas heating to more expensive electric heating. The 'Spark Gap' needs to be in the region of 2:1, i.e the price of electricity twice the price of gas to make ASHPs clearly cheaper, or at the very worst 3 times the price of gas to make prices comparable. At the moment the ratio is around 4 times, with electricity 26.32p and gas priced at 6.48p in our region. It doesn't take much of a shift: 24p and 8p or 23p and 7.5p. At the moment ASHP owners are reliant on having an efficient installation AND being able to leverage a cheap tariff for a heat pump to make sense. An efficient installation (SCOP of 3 or above) should also make sense on the SVR compared to gas.

Maybe they should use the Ofgem price cap to also cap the ratio at 3:1