Why are gas and electricity bills rising again ahead of winter?

As the weather begins to turn, many of us will be thinking about turning on our heating – if it’s not on already.

But as the price cap increases this October for those on a standard variable tariff, charities across Scotland fear many more people will face fuel poverty this winter.

The cap doesn’t give us the exact value that every household pays for their yearly gas and electric bill, but it does help us to look at the overall trend in prices.

On Wednesday, the rate rose by 2%, from £1,720 to £1,755, adding roughly £3 a month to your bills.

But if we look at the rate five years ago in October 2020, it’s risen by 68%, begging the question why and how much longer will it continue to rise?

This latest rise can be attributed to the government’s warm home policy, which gives around six million eligible households a one-off payment of £150 to help pay their bills.

Professor Paul de Leeuw from Robert Gordon University’s Energy Transition Institute told STV News: “The main thing we see happening today is policy costs coming into our bills.

“Many people, and deservedly so, are getting £150 towards their bills, but that money has to come from somewhere, and it’s not general taxation, it’s coming from other bill payers.”

But how do our bills in the UK compare with other European countries?

Gas prices remain relatively the same across the board, however, the amount we pay for electricity is higher.

On average, British households pay around 20% more for their electric bills, according to the latest UK Government figures, compared to 14 other European countries.

Professor de Leeuw added: “It’s really three components that are different from those in Europe; we have higher standing charges – that’s the cost of connecting our homes to the network.

“We also have higher costs associated with policy, particularly around how we get to net zero. Lastly, it’s how our electricity is priced. It’s priced off ga,s and that gives us a relatively higher rate too, particularly when gas prices are volatile.”

Charities across Scotland are calling for urgent reform in the way our bills are calculated to help bring down costs.

In response to the fresh calls, the UK Government say they are overhauling the way energy bills are calculated and plan to uncouple electricity prices from the price of gas.

But the time taken to do that will be crucial as forecasters predict bills could rise again next spring.