Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Deferred
UK electricity prices are highest among IEA countries, partly due to environmental levies
Conclusion
The United Kingdom has the highest price (including taxes and levies) for domestic electricity out of 25 International Energy Agency (IEA) countries reporting in 2023. Similarly, the UK has the highest price (including taxes and levies) for industrial electricity out of 24 IEA countries, again reporting in 2023.59 The price of the UK’s electricity is almost four times that of its gas. This is partly because the government’s levy for environmental policy costs (such as schemes to support renewable energy development) accounts for over 10% of an electricity bill.60
Government Response Summary
The government agrees rebalancing is needed and will set out proposals in due course, with a target implementation date of July 2025, but notes the complexity and difficult fiscal environment.
Government Response
Deferred
HM Government
Deferred
5.1 The government agrees with the Committee’s recommendation. Target implementation date: July 2025 5.2 The UK has a particularly high ratio of residential electricity price to gas price compared to many countries in Europe. The UK’s electricity price does not reflect the cheaper wholesale price of clean energy. This means low carbon technologies can be more expensive to run than fossil-fuel powered alternatives. The price disparity between electricity and gas needs to be addressed to make it more attractive for consumers to install clean technologies like heat pumps. 5.3 Close attention is paid to the balance of costs recovered on energy bills. The department is considering a range of different options to ascertain which best delivers on its priorities but is mindful it is currently operating in a difficult fiscal environment. 5.4 This is a complex issue and there are difficult decisions to be made which must be informed by robust research and analysis. The department will ensure it keeps fairness and affordability at the forefront of its mind throughout this process. 5.5 The government will set out proposals for rebalancing domestic energy bills in due course.