Households may get protection from global gas price spikes, but ministers have yet to confirm how much people could save
Households may get protection from global gas price spikes, but ministers have yet to confirm how much people could save(Image: Jacob King/PA Wire)
Millions of households across Great Britain could see changes to their energy bills under new UK Government plans to weaken the link between gas prices and electricity costs. Ministers say the move will make bills more stable and protect families from global price shocks, but have not yet confirmed how much people could actually save.
The announcement comes ahead of the next energy price cap change in July, with households already bracing for higher costs. At the moment, the UK Government uses a pricing system where the most expensive energy source – often gas – sets the wholesale price of electricity.
This means even though Britain now generates a growing share of power from renewables and nuclear, energy bills are still heavily influenced by volatile global gas markets.
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Energy Secretary Ed Miliband said the system leaves households exposed and warned the UK must move away from reliance on fossil fuels.
He said: “The era of fossil fuel security is over. Clean energy is now the only route to financial security, energy security and national security.”
Under the plans, the UK Government will encourage older renewable and nuclear generators to move onto fixed-price contracts. These so-called ‘legacy’ generators produce around a third of the UK’s electricity, and locking in prices is expected to reduce the impact of gas price spikes on bills.
However, officials have said it is not yet possible to estimate how much households could save, with any benefits likely to emerge over the next 12 months rather than immediately.
A spokesperson for Citizens Advice Scotland said the changes are unlikely to ease pressure on bills in the short term.
Molly Shevlin said: “Any effects of what is being proposed here would not be seen in energy bill reductions for a year. With bills set to skyrocket again in a couple of months’ time, support is desperately needed now.”
In the short term, Chancellor Rachel Reeves will increase the windfall tax on low-carbon electricity generators from 45 per cent to 55 per cent, with the extra revenue expected to support households and businesses facing rising energy costs.
The UK Government will also increase grants under the Boiler Upgrade Scheme to £9,000 to help more households in England and Wales switch to low-carbon heating systems such as heat pumps.
Prime Minister Keir Starmer said the changes are aimed at reducing the impact of global instability on household finances.
He said: “When global gas prices spike, people here shouldn’t be picking up the tab.”
Despite the plans, households are still expected to face higher bills in the near term, with energy costs continuing to track movements in global gas markets.
Ministers say breaking that link will take time, but argue the changes are a step towards a more stable and predictable energy system in the years ahead.
