Business Energy Market Update: December 2025

At the end of the November day-ahead prices closed £15 MWh, up on the month start at £76.75, as colder weather and seasonal uncertainty took its toll. There was good news for the most part however with recent developments in the Ukraine peace talks helping to ease prices down for contracts next year. Rates for December remained steady at this time and as mentioned, power for next year slipped to around 5% of its starting value.

Gas followed a similar trend but with only a slight rise in day ahead from the month’s start, up to 76.4 p/th from 74.25; although prices for December fell more sharply by 5.5 p/th to 76.7 and again further out, prices dropped by an average of around 6%.

It was price-cap-announcement time again for domestic customers and in a surprise to the market, the cap is set to rise by a fraction in January. There is good news on the horizon however as it is likely there will be a fall in prices from Spring onwards as the discounts announced in last month’s budget come into force.

From 1st April the Energy Company Obligation (ECO) and Renewables Obligation (RO) schemes cost elements will be removed from household bills, saving an average of £154 per year. The Energy Company Obligation (ECO) is a government scheme requiring energy companies to fund energy efficiency improvements for low-income and vulnerable households, but the largest saving comes from removing the cost of the now defunct RO scheme, saving £88 per year.

Despite the scheme having closed in 2017, any projects already accredited before the closure date will continue to receive ROCs for 20 years from their accreditation date. We welcome any relief on the high cost of energy in this country, although it is not clear if this latest relief for domestic bills will have any cost implications for business energy when the levy is removed.

Elsewhere, Reform’s Richard Tice has landed a withering blow on the vast cost to the taxpayer of the Drax biomass plant in Selby. Writing in a recent Daily mail column, Mr Tice accused Drax of hoodwinking the government following the firms recent £25m fine for failing to properly disclose the sources of their wood pellets. He went on to say energy from the plant costs double that of gas, and that it was directly responsible for making British business less competitive. Mr Tice also stated that, should Reform come to power at the next general election, “The subsidies will stop. Immediately" - threatening to seize control of the plant should Drax make any attempt to cut the power in protest! Whatever your opinion on burning trees for energy, Drax continues to be a contentious topic on the Net Zero agenda.

In other news, the RAB levy will be added to energy bills from 1st December, a month later than originally planned following backlash from energy industry leaders. The levy will see any business using 20,000 kWh per year pay an extra £70 on their annual bill. As previously reported, this charge is passed through from the government and is aimed at reducing the finance, and therefore final energy cost, of new nuclear reactors currently under construction.

We hope this update has been helpful, but if you have any energy or utility-related questions, please get in touch with the Clear Utility team on our usual channels.