Greens urge Miliband to break link between gas and electricity prices

The Green Party has urged the Energy Secretary to commit to “breaking the link” between gas and electricity prices, warning that a looming fossil fuel shock could send bills soaring amid the Iran conflict.

It comes after Ed Miliband, who has long touted Labour’s energy policies as a bid to get the UK off the “fossil fuel rollercoaster”, reportedly told MPs he was looking into decoupling electricity prices from gas.

Gas almost always sets the price of electricity under the marginal cost pricing model the UK uses.

This “rigged system” must change to better protect households from price spikes, MP Carla Denyer wrote in a letter to the Energy Secretary also signed by her four fellow Green MPs and the party’s two peers.

It reads: “As you are aware, bill-payers across the country are particularly at the mercy of these global gas price fluctuations because of the UK’s marginal pricing system for electricity.

“This means that gas-fired power stations almost always – around 85% of the time – set the price of electricity in the UK, even though a significant share of it comes from cheaper renewables, with gas only representing around a quarter of electricity generation by volume.

“This rigged system needs to change. By breaking the link between gas prices and electricity, the Government can better protect households from the devastating impacts of global energy price spikes.”

Chancellor Rachel Reeves told the Commons earlier this week that “gas is setting the price of our energy something like a third less than it was just four years ago”.

A spokesperson for the Department of Energy Security and Net Zero said: “The only way to bring down energy bills for good is with the Government’s clean energy mission, which will get the UK off the rollercoaster of fossil fuel prices and onto homegrown power that we control.

“Renewables have already cut the amount of time gas sets the wholesale price of electricity in Britain by about a third since the early 2020s – and will help to rapidly decouple electricity from gas prices.”

The Common Wealth think tank set out a proposed route to decoupling last week, suggesting emergency legislation be passed to instruct the National Energy System Operator to act as a single buyer of power.

This would then remove gas from the wholesale electricity market and onto fixed price contracts.

The Greens pointed to this an option.

Ms Denyer said: “The Government has said it’s looking into decoupling gas from electricity prices. With bills potentially soaring by hundreds of pounds, looking into it really isn’t going to cut it.

“We need decisive action to end rip-off Britain. The Government must commit now to breaking the link between expensive gas and cheaper renewables.”

The party has also tabled an Early Day Motion in Parliament calling on the UK Government to “urgently take control of electricity prices by decoupling the price of gas from the price of electricity”.

It has 15 signatories including former Labour leader Jeremy Corbyn and Labour MP Nadia Whittome.