Common Wealth Thinktank Electricity Report could save households nearly £200
Common wealth thinktank electricity report says households in England, Scotland and Wales could save nearly £200 a year if the government became the sole buyer of electricity. The proposal would change how power is priced and sold, with the state buying electricity first and reselling it to consumers.
Nearly £200 a year is the headline saving for households, while the report says the model could also shave billions of pounds from electricity prices. For people facing average energy bills that are to rise by more than £200 in July because of the impacts of the Iran war, the timing is direct: the new system is pitched as a way to push bills down even as near-term costs move up.
Donal Brown on gas pricing
80% to 90% of the time is how often gas still sets the price, even though it generates only a quarter of the UK’s power, according to Donal Brown, a senior researcher in energy policy and political economy at the University of Oxford. He 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.”
£74bn is the scale of savings the report says the reforms could deliver over a five-year period if gas prices remain high and keep electricity prices at £100 a megawatt-hour. The contrast is stark: the existing market structure lets gas generators set the wholesale price for all consumers, so cheaper power from renewables does not fully flow through to bills.
Public buying and contract pricing
The government would become the sole buyer of electricity and would effectively buy all the power generated in England, Scotland and Wales through contracts offered by a publicly accountable body to generators. The report says gas generators would join a strategic gas reserve and be paid to step in when renewables were producing less or nuclear reactors were offline.
Legacy nuclear power plants, older windfarms with generous past subsidies, and existing hydroelectric plants would be paid through public power purchase agreements. The report suggests those contract prices would be set by the average of the overall generation mix rather than being pegged to gas prices.
England, Scotland and Wales bills
Bill payers in England, Scotland and Wales would be the immediate test case for the model, because the savings estimate and the market redesign both focus on those three nations. Earlier this year, proposals were already set out to de-link gas and electricity prices, but the new report goes further by arguing for direct public procurement rather than a lighter-touch adjustment.
For households, the practical change is simple: if the government buys electricity on these terms and the pricing link to gas is broken, the report says annual bills could fall by nearly £200, while the five-year gain could reach £74bn under the high-gas-price scenario it sets out. That is the number to watch, because it turns a policy redesign into a household bill forecast rather than a theory about market structure.
