Chancellor Rachel Reeves told reporters in Washington that her team will work with energy secretary Ed Miliband to sever the automatic tie between wholesale electricity prices and volatile gas costs. The proposal follows months of industry pressure and energy bills across the UK. The move aims to prevent surging gas markets from inflating power bills, even as renewable generation becomes the bulk of Britain’s supply.

Under the current “pay‑as‑clear” auction, the most expensive marginal plant – typically a gas‑fired unit – sets the half‑hourly price, meaning gas determines the market three‑quarters of the time despite supplying just under a third of annual output. Critics argue consumers pay for gas‑generated electricity while renewables now provide about 52.5 % of generation and limits flexibility for operators in the electricity market.

Industry insiders say the government has already dismissed proposals to split the wholesale market after an exhaustive review, leaving policymakers to explore less‑tested mechanisms. Recent offshore wind contracts secured guaranteed prices of £91 per megawatt‑hour, above current market rates, highlighting the cost of shielding investors. Reeves said de‑linking will reduce pressure on household bills without raising taxes or debt, which may affect consumer tariffs.