A proposed overhaul of the United Kingdom electricity market could cut annual household energy bills by an average of £185 across England, Scotland, and Wales, according to a report by thinktank Common Wealth published on June 10, 2026.
The plan calls for a publicly accountable body to act as the sole purchaser of electricity.
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This would break the link between retail prices and volatile global gas markets, which are currently affected by the Iran conflict.
Research shows that gas generators set wholesale electricity prices 80 to 90 percent of the time, even though they produce only a quarter of the nation's power.
This forces cheaper renewable and nuclear energy to be sold at inflated gas-linked rates.
If wholesale electricity prices stay at £100 per megawatt-hour due to high gas costs, the centralized system could save £74 billion over five years.
Even if prices drop to £70 per megawatt-hour, total savings would reach £41 billion.
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How the Proposed System Would Work
Under the proposed structure, the government would secure electricity from all generators using long-term contracts.
Gas-fired stations would become a strategic reserve, operating only during low renewable output or nuclear outages.
“Britain's electricity market was designed for a fossil fuel age and it's now a key barrier to a lower-cost, low-carbon future,” said Donal Brown, senior researcher in energy policy and political economy at the University of Oxford.
Brown noted that the current setup directs billions of pounds in excess profits to specific generators while forcing British consumers to pay some of the highest electricity rates in the developed world.
The policy debate intensifies as the UK Treasury plans to raise the windfall tax on excess profits of electricity generators from 45 percent to 55 percent to support struggling households.
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Government officials have expressed the need to transition toward homegrown clean energy to achieve long-term bill stability and insulate the domestic market from global fossil fuel price shocks.
