The Government has announced a package of measures to reduce the influence of volatile gas prices on electricity prices in Great Britain, with the stated aim of protecting households and businesses from future energy price shocks. While the measures are primarily focused on electricity generation and wholesale pricing, they have important downstream implications for energy consumers, suppliers, and the wider system in which meter operators play a critical role.
At present, gas continues to set the wholesale electricity price around 60% of the time, despite renewables and nuclear providing a growing share of generation. As a result, fluctuations in international gas markets directly impact electricity bills, even where the underlying cost of generation has not changed. This results in bill volatility that consumers often struggle to understand, and which feeds through supplier pricing, billing complexity, and consumer trust—issues that directly affect AMO members operating at the customer interface.
To address this, the Government is strengthening the Electricity Generator Levy (EGL), increasing the marginal tax rate on excess revenues from 45% to 55% from July 2026 for non‑CfD renewable and nuclear generators. This is intended to ensure that windfall profits arising during periods of high gas prices are more effectively recycled to support households and businesses facing higher energy costs, rather than remaining within the generation sector.
In parallel, the Government plans to introduce a new voluntary Wholesale Contract for Difference (CfD) for legacy renewable generators, with the first auction expected in 2027. This mechanism aims to move a greater proportion of electricity generation onto long‑term, fixed‑price contracts, reducing exposure to gas‑driven wholesale price volatility. Around 30% of Britain’s electricity supply is currently estimated to remain exposed to gas‑set prices, and these reforms are intended to materially reduce that exposure over time.
For AMO members, these measures are significant in several respects. Greater price stability at the wholesale level should support more predictable retail pricing and billing structures, potentially easing consumer confusion and complaint volumes during energy price shocks. Over time, reduced price volatility may also lower pressure on emergency policy interventions and short‑term customer support mechanisms, supporting a more stable operating environment for suppliers and metering providers.
More broadly, the reforms align with the Government’s clean energy mission to accelerate the transition to low‑carbon power, strengthen energy security, and ensure consumers see the benefits of cheaper renewable generation reflected in their energy bills. AMO will continue to monitor the detailed design and implementation of these measures to assess their practical impact on metering operations, consumer outcomes, and the wider energy market framework.
Decisive action to break influence of gas on electricity prices – GOV.UK