Government to propose electricity price changes in clean power push

The government will unveil a plan on Tuesday to weaken the link between electricity and volatile gas prices, which it says will better protect consumers from energy shocks triggered by international conflicts.

The government wants some older renewable energy producers to switch to fixed-price contracts instead of the current system, which typically pays based on the variable price of gas.

He hopes this change will happen within the next year so that electricity prices are not so prone to sudden increases in fossil fuel prices.

The government has not put a figure on the savings but believes they could be “significant”. Conservatives say Labor’s targets will increase bills.

The changes will be announced in separate statements by Chancellor Rachel Reeves and Energy Minister Ed Miliband on Tuesday.

“For the UK and many other countries, clean energy is now the only path to financial security, energy security and national security,” Miliband said in a speech.

He is expected to call on the government to “redouble” its clean energy drive, arguing that “our action must now be faster, deeper and broader” in response to the war in the Middle East as well as the fight against climate change.

Despite renewable energy produces more electricity More than ever, the relatively cheap running costs of wind and solar are not fully reflected in people’s bills.

This is partly because the price of electricity on the wholesale market is determined by the last unit of electricity required to meet demand at any given time in the current system.

In Britain this last unit is usually gas; This means that when gas prices rise, so do electricity bills.

The government has decided not to renew the entire system for now; When the sun doesn’t shine and the wind doesn’t blow, gas still plays an important role.

But the government wants to shift older, clean energy projects, which account for around a third of Britain’s electricity generation, to fixed-price contracts.

This will bring them into line newer renewable energy developmentsand analysts say it will better protect households against increases in fossil fuel prices.

The government doesn’t have an exact estimate for bill savings but says it’s confident it will save people money.

Plans to weaken the link between electricity and gas prices will be subject to consultations, but the government believes changes could happen within about a year.

On Tuesday the chancellor could also announce increases to the windfall tax on electricity generators, which comes into force in 2023. The tax applies to some generators with older renewable energy contracts that would otherwise make big profits when gas prices rise.

The government hopes that the threat of a tax increase will encourage these producers to voluntarily switch to fixed-price contracts that will not be taxed as such.

Miliband will also announce plans to change planning laws to make it easier for those without a driveway to charge electric cars and enable more businesses to install solar panels.

In response, shadow energy secretary Claire Coutinho accused Miliband of “piling cost upon cost on people’s electricity bills”, pointing to wholesale prices as well as taxes and duties on bills.

“If we want people to use electricity, we need to make it cheap,” he said.

Liberal Democrat energy spokeswoman Pippa Heylings said the government needed to take action to break the link between electricity and gas prices.

“We have consistently argued that if the UK generates increasingly cheaper renewable electricity, households should benefit from lower bills,” he said.

Green Party energy spokeswoman Carla Denyer said she was “relieved” to hear of the plans but accused the government of being too slow to act.

“Almost two years have passed since the elections; in those two years, they could have prevented such a crisis rather than just intervened,” he said.

Plaid Cymru also welcomed the proposed changes but called on the government to go further.

“Households and businesses will continue to pay this price as long as electricity prices are tied to volatile gas markets,” energy spokesman Llinos Medi said.

Reform UK and the SNP have been contacted for comment.

part of Northern Ireland separate energy market.

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