Reforms to electricity pricing system to reduce costs, encourage clean power announced by Government
Thu 10 July 2025
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The Government has set out proposals to reform the existing national pricing system for electricity to "protect consumers and deliver the clean power mission".
Following an extensive consultation which started in 2022, the Government has concluded that reforming the system while retaining a single national wholesale price is the right way to deliver a fair, affordable, secure, and efficient electricity system.
It says that the reforms will protect consumers and secure investment as Government drives to deliver its clean power mission, protecting families through its Plan for Change.
The proposals are intended to ensure that the benefits of clean power are felt by consumers in every part of the country, while giving businesses the stability and certainty they need to continue investing to upgrade the UK's infrastructure.
Energy Secretary Ed Miliband said: "Building clean power at pace and scale is the only way to get Britain off the rollercoaster of fossil fuel markets and protect families and businesses for good.
"As we embark on this new era of clean electricity, a reformed system of national pricing is the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives."
The further changes announced alongside the electricity market decision will see the Government taking on more responsibility for planning the system and determining where clean energy infrastructure is located, based on what is needed for the long-term.
The Government says that these changes will ultimately help to bring down energy bills, by making the current system more efficient, ensuring low cost investment into cheap, clean energy projects, and reducing the cost of running the electricity network.
Subsequently, in a separate announcement, the Government has proposed that around 500 of the UK’s most energy-intensive businesses such as British Steel and INEOS will be boosted by a 90% discount for businesses’ network charging costs. The move follows the promise made in the UK’s modern Industrial Strategy launched in June to cut energy costs for heavy industry. The proposals are expected to save around 500 of Britain’s most energy-intensive firms in key sectors like steel, ceramics, glass and chemicals up to £420m per year from 2026, and bring the UK’s industrial energy prices in line with European competitors.
The Government has launched a four-week consultation on its plans to increase the discount on businesses’ electricity network charges from 60% to 90%.
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