Households in England, Scotland and Wales could save nearly £200 a year on energy bills if the government acted as the sole buyer of electricity, according to a thinktank report. The proposal, from Common Wealth, aims to break the link between gas and electricity prices, which currently allows gas generators to set wholesale prices despite generating only a quarter of the UK's power.
Under the plan, the government would buy all electricity through a publicly accountable body, offering contracts to generators at cost-effective prices. Gas-fired plants would be placed in a 'strategic gas reserve', paid only to operate when renewables or nuclear are insufficient. Legacy nuclear, older windfarms and hydroelectric plants would receive payments based on the average generation mix, not gas prices.
Lead author Donal Brown of the University of Oxford said: 'Britain’s electricity market was designed for a fossil fuel age and it’s now a key barrier to a lower cost, low-carbon future. Gas still sets the price for 80% to 90% of the time, funnelling billions in windfall profits to private generators.'
The report estimates savings of up to £74bn over five years if gas prices remain high, or £41bn if they fall. On average, households could save around £185 annually. Further savings could come from encouraging off-peak electricity use and investing in battery storage.
The government faces pressure after the Iran war drove up gas prices, with average bills set to rise by over £200 in July. Chancellor Rachel Reeves plans to increase the windfall tax on electricity generators from 45% to 55%, but critics argue more radical reform is needed.
