Britons could save on soaring bills as ministers plan to end link between gas and electricity prices

LONDON -

Britons could be handed relief on rocketing household bills under Government plans to sever the link between the prices of gas and electricity, it has emerged.

Ministers are set to bring forward new laws under the Energy Security Bill to overhaul the UK's energy market in the face of the current cost-of-living crisis.

They have promised to provide greater protection for Britons against global fluctuations in energy prices.

The current worldwide crisis has been exacerbated by the Ukraine war, which has sent gas prices spiralling higher.

Under the current make-up of Britain's energy market, soaring gas prices have had a knock-on effect on electricity costs.

But it has now been reported the new legislation will seek to prevent future shocks in the global gas market having a similar impact on electricity prices.

Yet the overhaul might not come in time to ease rocketing energy bills ahead of this winter.

According to The Times, Business Secretary Kwasi Kwarteng will outline proposals for reforms in the coming weeks.

These will then form part of the Energy Security Bill to be introduced in the autumn.

The newspaper said the plans will end the current system under which the wholesale cost of gas effectively determines the price of electricity for households.

Although more than a quarter of Britain's electricity comes from renewable sources, under current market rules it is the most expensive megawatt needed to meet demand that determines the price for all electricity generation.

This means that soaring gas prices have driven up all electricity costs in recent months, even though only around 40% of UK electricity comes from gas power stations.

Energy experts have compared the current market to train passengers having to pay the peak-period price for every journey they make.

One Government source told The Times: 'In the past it didn’t really matter because the price of gas was reasonably stable.

'Now it seems completely crazy that the price of electricity is based on the price of gas when a large amount of our generation is from renewables.'

It was also claimed ministers hope the reforms will make the market more transparent and emphasise to consumers the benefits of decarbonisation.

A Government spokesperson said: 'The high global gas prices and linked high electricity prices that we are currently facing have given added urgency to the need to consider electricity market reform.