Ofgem proposes setting electricity prices on a regional or local level

The regulator has said reforming wholesale electricity markets could save customers billions of pounds

Big Zero Report 2022

Ofgem has proposed a new plan that could see the UK move from setting wholesale electricity prices at a national level to either a regional or local level.

That is one of the reforms of the UK’s energy system the energy regulator proposed to help the country reduce its reliance on gas imports and accelerate the transition towards net zero.

More specifically, Ofgem proposed:

  • strategic planning for the energy system by a new independent Future System Operator at a national level and a potentially similar model at a local level;
  • potential reforms to the electricity wholesale market, including limiting the price setting potential of natural gas, which could be done by splitting the wholesale market and using pricing signals to run the system more efficiently and save customers billions of pounds collectively on their energy bills.

Jonathan Brearley, Ofgem’s Chief Executive, said: “Record gas prices are driving the cost of living crisis, causing real harm to customers and the wider economy.

“As well as doing everything we can to protect customers now, we must diversify Britain’s energy supplies away from gas as soon as possible. Recent months have demonstrated that the arguments for boosting our energy security and building a home-grown supply have never been stronger.

“The economics of energy have fundamentally changed with green energy no longer a desirable but costly alternative, instead, it is now the secure, more reliable and cheaper option.”

If you enjoyed this story you can sign up to our weekly email for Energy Live News – and if you’re interested in hearing more about the journey to net zero by 2050, you can also sign up to the future Net Zero newsletter. 

Latest Podcast