The Select Committee on Energy Security and Net Zero has begun a new enquiry into energy bills to consider how bills can be reduced for domestic and commercial consumers.
The Committee says there are concerns that the current standing charge on bills is regressive, the balance between electricity and gas prices in the UK and whether the levies included in bills can be reduced either by rebalancing with gas or through higher taxes. This is a big issue for commercial bills as international competitors have the advantage of lower electricity prices.
The Committee will also ask how consumers are protected from bad behaviour by energy retailers – it has seen evidence of issues with regard to back-billing, which is against Ofgem rules – and how disputes between consumers and their energy suppliers should be resolved
The Committee is also interested in the impact of the transition costs on business and commercial users, who do not benefit from the price cap introduced for domestic consumers.
The inquiry aims to:
• Determine whether the rules on billing are fair to all consumers
• Understand where the costs of energy transition may fall within the sector in a more equitable fashion
• Examine the protections for consumers against energy retailers
• Hold the Government to account on its promise to reduce energy bills by £300
Written evidence can be sent to the Committee by 6 April on the following questions:
• Are the costs and benefits of the energy system properly reflected in consumer bills?
• How should consumer bills be insulated from inflated prices due to shocks to the global supply of gas? What needs to change?
• Where should the costs of decarbonising the grid lie?
• Is it practical for consumer bills to be reduced by £300 before the end of the Parliament?
• Does the Ombudsman service provide a responsive, accessible service for consumers in dispute with their energy providers?
“Suppose that regulation was changed. Instead of all producers, whether of gas or electricity, being paid the price of the highest cost supplier in their market they were instead paid their own fair marginal cost of production, including a reasonable profit margin.
Then presume that the energy regulator priced the onward supply of wholesale gas and electricity to the energy distribution companies on the basis of the actual cost to produce (including fair profit) of the gas and electricity actually sold into the market each day.
I stress, that for much of the renewables sector and for nuclear this will not be hard to do because of the nature of the government price guarantees that are already in place.
For gas, simply mix internationally priced gas with UK-produced gas at its fair price of production. That’s all that is required.
This would, though, require a change in the law. There would be yelling, screaming and shouting from some energy companies, despite what I have noted, and legal threats galore. These will need to be ignored for one straightforward reason. This is that the state should not support a market rigged by its own regulation.”
Its time to change uk energy pricing – Funding the Future
https://www.taxresearch.org.uk/Blog/2025/02/25/its-time-to-change-uk-energy-pricing/