Ofgem and NESO face questions on UK energy costs
As the UK’s energy costs once again fall prey to geopolitical crises beyond our control, the Energy Security and Net Zero Committee will question the energy market regulator and the system operator on the impact of the Iran conflict, and on the share of our household energy bills that are not linked to the wholesale price of gas.
What must change to bring those “non-commodity” costs down?
Russia’s 2022 invasion of Ukraine exposed weaknesses in the UK’s energy market, with supplier failures and emergency Government support costing taxpayers tens of billions of pounds. And although wholesale gas prices had begun to fall since their peak, the current Iran conflict has sent the price soaring again.
In October, E.ON UK CEO Chris Norbury told the Committee that by 2030 non-commodity costs — including network charges, policy costs, operating costs and energy debt — could be so significant that even if wholesale prices fell to zero, bills might remain at today’s levels.
In the November 2025 Budget, the Government shifted some policy costs — including the Energy Company Obligation and part of the Renewables Obligation — from household bills to general taxation.
At the same time, significant investment in electricity networks is required to modernise infrastructure and support clean power, following decades of underinvestment, while the expansion of storage capacity offers exciting opportunities.
Meeting details
The Committee has previously argued that windfall profits from network operators should contribute more to reducing the burden of energy debt on bills, describing Ofgem’s current approach as inadequate.
MPs will examine:
- The scale and trajectory of network and policy costs
- The impact of investment requirements on future bills
- Options for reducing the burden of energy debt
- How the regulatory framework can better protect consumers while enabling a secure, clean energy system