Energy industry insiders have proposed a plan to decouple rocketing prices for gas-generated electricity from other sources. a move that they claim can reduce bills by up to £18bn a year.
Energy UK, the sector’s trade body, estimates households would pay between £150 and £250 less a year and companies save £11bn.
The voluntary scheme would see electricity from sources including nuclear, solar and wind priced separately from energy generated by gas-fired power stations,
All electricity prices are currently pegged closely to gas prices.
Kwasi Kwarteng, Business Secretary, reportedly met Energy UK members and is thought to be seriously considering presenting it to the next PM, who will be announced on Monday.
The suggestion, which was first brought forward by UK Energy Research Centre, would encourage nuclear power stations and renewable energy generators to sign up for contracts for difference (CfDs), meaning they would sell electricity at a lower price but one that would be fixed for a number of years.
Most of these generators currently sell at real-time wholesale rates.
Adam Berman, Energy UK’s deputy director, said: “The current energy market doesn’t allow customers to fully benefit from the cheapest form of electricity – domestically produced low-carbon generation.
“This scheme would be a significant first step to decoupling gas from retail electricity prices.
“Removing the link between gas and retail electricity prices will be complex and take time, but this solution provides a quick fix for up to 40% of our generation capacity.”