London: Britain set out plans to weaken the link between its cost of electricity and volatile gas prices on Tuesday, saying it would seek to force older renewable energy generators onto fixed contracts in a bid to bring down consumer bills.
Britain has some of the highest electricity prices in the world due to the structure of its energy market which means gas sets the price for all generation most of the time, pushing up bills that weigh on households and damage industrial competitiveness.
Domestic energy prices are poised to soar again from July - as the regulator's price cap enters a new pricing quarter from July to September - due to surging wholesale gas costs, which are currently 30% higher than before the Iran conflict began.
That would threaten a government pledge to bring down energy bills.
On Tuesday it said voluntary long-term fixed contracts would be offered to existing low-carbon generators not on fixed-prices so they are not being paid the price of gas. It said this would cover around a third of Britain's power supply.
It also said it would increase the Electricity Generator Levy by raising the rate from 45% to 55%. The levy is imposed on wind and solar generation to claw back the higher payments they were getting for being paid the higher cost of gas.