Reeves vows to break link between cost of gas and electricity prices in boost for UK households
Chancellor Rachel Reeves and Energy Minister Ed Miliband are seeking solutions to break the direct link between electricity and gas prices.
According to the UK’s marginal cost pricing model, gas generally determines the cost of electricity.
Reeves said the move was a “big change” but “the right thing to do” and that he hoped to hear more news about the plans “in the coming days or weeks.”
Speaking in Washington, the Chancellor said: “So this is an issue that has interested me for a long time, the disconnect between electricity and gas prices.
“Currently, with gas prices high, we pay more for our electricity, even though the cost of production remains unchanged.
“And myself and Ed Miliband are currently trying to find a practical way to differentiate between these prices.
“It’s a pretty big change but it’s absolutely the right thing to do, especially given that electricity is making up an increasing part of our energy mix, and we hope to be able to provide more detail on what that looks like over the next few days, weeks.”
Mr Miliband has long touted Labour’s energy policies and a switch to renewable energy as a way to get Britain off the “fossil fuel roller coaster”.
Renewable energy has reduced the amount of gas that determines the wholesale price of electricity in Britain by around a third since the early 2020s, according to the Department for Energy Security and Net Zero.
The head of Energy UK said earlier this week that the divergence of electricity prices from gas will happen gradually along with the transition to clean energy.
“Over time, this will decrease as we add more renewable energy to the system,” said Dhara Vyas, CEO of the industry body.
Ms Reeves also spoke on Thursday about North Sea oil and gas interconnects (satellite wells to exploit existing fields) in which the Government is encouraging investment.
The Chancellor said: “Last year in the budget I announced that we would allow moorings.
“We are currently working very intensively with energy companies on technical details.
“Hardening is where you use existing infrastructure to leverage a broader geography of oil and gas.
“This is the fastest way to get more oil and gas flowing, and it’s important we get the details right so companies have the confidence to exploit these resources.”
