UK decisive action to break influence of gas on electricity prices

• • Families across the country will be better protected from energy crises, as government moves to break link between gas and electricity prices
  • New plans include long‑term fixed‑price contracts for renewables, protecting families when gas prices spike
  • Immediate action to tax excess profits through the Electricity Generator Levy by raising the rate from 45% to 55% and extending its duration, ensuring an increased proportion of the extraordinary revenue generated when the gas price spikes is available to government to support businesses and households with the cost-of-living
  • Comes as government doubles down on drive for clean, homegrown power with raft of measures to unlock public land, speed up planning and cut bills for families

LONDON, England – Plans to better protect families and businesses by ending the unfair way international gas prices push up electricity prices across Great Britain take a major step forward today. Instability in the Middle East has shown that Britain’s reliance on international fossil fuel markets leaves families and businesses exposed to volatile gas prices, driving the cost-of-living crisis even though much of the country’s electricity comes from cheaper renewables and nuclear.

When wars, geopolitical tensions or supply shocks abroad push up global gas prices, electricity bills rise with them, exposing families to crises they have no control over.

Over time, this problem is easing as new clean energy projects are built on fixed price contracts that protect consumers from gas price volatility. But a significant share of renewable generation – about 30 percent of Britain’s power supply – is still exposed to wholesale prices set by gas, leaving families vulnerable when international prices rise.

Therefore, to shield families from future crises, today the government is setting out new measures to ‘break the link’, reducing the impact that volatile gas prices have on the price of electricity. This will be done by:

• Voluntary long term fixed contracts: Offered to existing low-carbon generators not on fixed‑price contracts – covering around a third of Britain’s power supply. This will help protect families and businesses from higher bills when gas prices spike, with contracts offered only where they deliver clear value for money for consumers.
• An updated Electricity Generators Levy: Immediate action to tax excess profits through the Electricity Generator Levy by raising the rate from 45 to 55 percent, ensuring an increased proportion of the extraordinary revenues generated when the gas price spikes is available to government to support businesses and households with the impacts of the conflict in the Middle East on the cost of living.

Measures announced today will further reduce the share of electricity exposed to gas price shocks and provide generators with the economic incentive to move on to fixed contracts not linked to volatile gas. The government is monitoring the impact of the current crisis on energy bills and will be ready to step in to provide targeted support where necessary.

Britain has already moved from gas setting the price of electricity around 90 percent of the time in the early 2020s, to around 60 percent today. Through the government’s clean energy mission, it is estimated that gas will set the wholesale price around half of the time by 2030.

Prime Minister Keir Starmer, said:

“We need to get off the fossil fuel rollercoaster – this will make energy bills more stable and take the pressure off family budgets. When global gas prices spike, people here shouldn’t be picking up the tab. Our focus is simple: easing pressure on household budgets now, while building a homegrown energy system that protects families from global instability in the years ahead.

Energy Secretary Ed Miliband, said:

“As we face the second fossil fuel shock in less than 5 years, the lesson for our country is clear: The era of fossil fuel security is over, and the era of clean energy security must come of age. That’s why we’re doubling down on clean power, to give our country energy security and bring down bills for good.

Chancellor Rachel Reeves, said:

“Hardworking British families and businesses should not bear the brunt of global gas price shocks while electricity generators are making exceptional profits. Alongside moving generators onto the competitive pricing assured through wholesale Contracts for Difference, increasing the EGL to 55 percent will help to break the link between high gas prices and high electricity prices – offering households and businesses stronger protection against future energy shocks.”

The post UK decisive action to break influence of gas on electricity prices appeared first on Caribbean News Global.