Ed Miliband is actively exploring a break from the UK’s gas-linked electricity pricing model as pressure builds inside government following the latest spike in global energy markets driven by the Iran conflict.
According to Sky News, the Energy Secretary raised the issue directly with Labour MPs on Monday night, signalling that decoupling electricity prices from gas is now being taken seriously at the top of government as part of a broader response to rising bills.
The current system means electricity prices are set by the marginal cost of gas generation, even when large volumes of cheaper renewable power are on the grid.
With oil prices climbing above $100 a barrel amid disruption in the Middle East, that mechanism is once again feeding through into higher household bills.
Speaking to Sky News, he warned that exposure to global fossil fuel markets leaves the UK vulnerable during periods of geopolitical instability, adding that it is ultimately “the British people who end up paying the price.”
Behind the scenes, discussions with MPs suggest the Government is now weighing how to redesign the market so electricity reflects the true cost of generation, particularly as renewables make up a growing share of supply.
The push sits alongside wider short-term interventions, including warnings to fuel retailers over pricing and targeted support for households reliant on heating oil, as ministers try to contain the immediate cost-of-living impact.
Can it be done?
Decoupling gas and electricity prices would mark a fundamental shift in how the UK energy market operates, potentially allowing cheaper wind and solar to feed through directly into consumer bills rather than being dragged up by volatile gas prices.
The big challenge is execution. Any reform risks unsettling investment signals and would require a careful redesign of how generators are paid
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