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Electricity Market Review 2025-07-10
10 July 2025
Lead MP
The Secretary of State for Energy Security and Net Zero
Debate Type
Ministerial Statement
Tags
Climate
Other Contributors: 17
At a Glance
The Secretary of State for Energy Security and Net Zero raised concerns about electricity market review 2025-07-10 in the House of Commons. A government minister responded. Other MPs also contributed.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Government Statement
Today, I am announcing the postponement of local elections affecting 3.7 million voters due to a review of electricity market arrangements. The central challenge is transitioning from expensive, insecure fossil fuels to deliver an energy system that meets at least double the current electricity demand by 2050. The task involves designing the network to ensure infrastructure is built in the right places, preventing power wastage and higher bills for consumers. Two main options were considered: zonal pricing and a reformed national price system. Zonal pricing would rely on price differentials to guide investment decisions, while a reformed national price system would involve more deliberate strategic co-ordination before investment. After applying three tests—fairness for families and businesses, energy security and consumer protection, and promoting investment and growth—I concluded that the right approach is reformed national pricing due to fairness concerns and potential risks to investment under zonal pricing. This decision will help deliver a fairer, more affordable, secure, and efficient clean power system by building necessary network infrastructure and improving market flexibility through reforms. These steps build on previous efforts to boost renewable energy capacity and support businesses, aiming to ensure energy security and protect consumers from fossil fuel markets.
Claire Coutinho
Con
East Surrey
Question
The Secretary of State's decision reveals a prioritization of wind developers' profits over cutting bills for the British people. His unachievable 2030 targets based on ideology have led to higher electricity costs, with recent auctions securing contracts at £86 per megawatt-hour—almost 15% higher than average costs. This decision will result in higher bills due to increased grid infrastructure costs and constraint payments for wind farms, adding up to billions of pounds annually.
Minister reply
While the shadow secretary criticises the government's approach, it is essential to recognise that reformed national pricing aims to ensure a fairer, more affordable, secure, and efficient clean power system. The decision is based on thorough analysis considering fairness for families and businesses, energy security and consumer protection, and promoting investment and growth.
Bill Esterson
Lab
Sefton Central
Question
Does the Secretary of State envisage increasing opportunities to use demand flexibility as a key way of bringing down energy costs for domestic and industrial consumers?
Minister reply
Yes, my hon. Friend is right about consumer-led flexibility which allows consumers to control when they use energy through things like batteries, solar panels, heat pumps, and smart metres, saving money both for themselves and the system.
South Cambridgeshire
Question
Will the Secretary of State publish his cost-benefit analysis to ensure that British consumers are not exposed to an unknown level of risk?
Minister reply
We will publish the cost-benefit analysis later in the year as our document published today states, and we will move towards contracts for difference rather than renewables obligations, ensuring reductions in price feed through to consumers.
Mike Reader
Con
Northampton South
Question
In Northamptonshire, Green Hill Solar is bringing forward a massive opportunity for clean power. Does the Secretary of State agree that this investment and certainty will create quality technical jobs locally in Northampton and reduce people’s energy bills?
Minister reply
The hon. Member's point about jobs is critical. The new Rampion 2 when fully operational, will create thousands of jobs as well as more jobs in the supply chain. We want those jobs to be made in Britain.
James Wild
Con
North West Norfolk
Question
Under the current system, the most expensive generator sets the clearing price for electricity, pushing up prices for consumers and businesses. Can the Secretary of State explain how the reforms will change that by moving to a pay-as-bid system and providing more affordable energy?
Minister reply
The key thing is if we can get renewables on to the system gas will set the price much less often. This will have a genuinely transformative effect.
Barry Gardiner
Lab
Brent North
Question
The Conservative system needed to tackle transmission charges, constraint payments and marginal cost pricing. I welcome the strategic special energy plan which sees assets built closer to their users and lower transmission charges. Can my right hon. Friend elaborate on what he said in response to the hon. Member for North West Norfolk (James Wild) and tell us whether there are any plans to decouple the wholesale price of gas from the system?
Minister reply
A key thing that clean power will do is that gas will set the price much less often, with ROs being phased out and CfDs coming in. We need all elements of the system, including nuclear, renewables, battery storage, and LDES.
Bath
Question
UK households pay almost the highest energy costs compared with other European countries due to electricity costs coupled to gas. What more can the Government do to rapidly increase support for emerging technologies like long-duration storage?
Minister reply
We have a cap and floor mechanism for LDES, which Ofgem is looking at the applications made, and that will be driven forward.
Deirdre Costigan
Lab
Ealing Southall
Question
Does he agree that this Labour Government’s plan to invest in clean, cheap, renewable energy and reform energy pricing for the whole country as one is a fairer and more effective way of reducing bills?
Minister reply
The choice is not reform or no reform; it's what kind of reform. The reformed national pricing system will cut bills by getting on with building infrastructure.
Llinos Medi
PC
Ynys Môn
Question
Can the Secretary of State say how the upcoming Strategic Spatial Energy Plan (SSEP) will put the needs of communities at its heart, and support small-scale energy projects?
Minister reply
We are interested in how we make it more worthwhile for individual householders to install solar panels, which is right for them and a way to cut bills.
Tracy Gilbert
Lab
Edinburgh North and Leith
Question
To meet the needs of consumers and businesses, we need a flexible energy network. Can he set out in more detail how he envisages that happening?
Minister reply
Scotland has really exciting plans to drive forward renewable energy, particularly offshore wind. This is something we are really focused on.
Seamus Logan
SNP
Aberdeenshire North and Moray East
Question
Will his statement make it easier for private investment to come in and deliver us towards that journey to net zero, and does he foresee lower energy costs for consumers?
Minister reply
We have opted for the reformed national pricing system which can lower wholesale prices, leading to lower energy costs.
Chris Murray
Lab
Edinburgh East
Question
To tackle climate change we need fast action on net zero. Does the Secretary of State think the decision will help Scotland boost its energy sector and fight against climate change?
Minister reply
Scotland's energy sector is crucial for achieving net zero, and offshore wind is a critical part.
Luke Myer
Lab
Middlesbrough South and East Cleveland
Question
Yesterday I hosted a roundtable of manufacturers in my rural constituency who welcomed the Government's industrial strategy, particularly measures on industrial energy prices. However, they raised concerns about grid connections. Will the Government work with me to improve these connections so that industries like clean energy can benefit?
Minister reply
My hon. Friend is right to raise this issue. We have ended the first come, first served system for grid connections and are implementing a more intentional, planned approach. This will help businesses in his constituency and across the country by freeing up capacity for industrial projects.
Claire Hughes
Lab
Bangor Aberconwy
Question
I thank the Secretary of State for opting for a reform system that will avoid bills going up in my constituency. Does he agree that our clean power mission is vital not only to generating lower bills and better jobs but also to providing opportunities for people growing up in areas like mine, where there are new wind farms?
Minister reply
My hon. Friend puts it well. Young people understand the growth potential of green industries such as nuclear, renewables, and carbon capture. There is a huge opportunity for Britain, including her constituents, to benefit from these industries.
Jas Athwal
Lab
Ilford South
Question
I thank my right hon. Friend for his statement and vision on inherited zombie systems from the previous Government, which led to the worst cost of living crisis in memory. Does he agree that the Conservatives have shown no contrition whatsoever?
Minister reply
My hon. Friend puts it well. The Conservatives have not acknowledged their mistakes or learned any lessons. Their refusal to accept responsibility is a recipe for political oblivion.
Cardiff West
Question
I thank my right hon. Friend for his statement and the Under-Secretary of State's extensive conversations with Welsh Labour MPs on concerns about zonal pricing, which we felt would fail the 'fair and affordable' test. Now that reform national pricing has been announced, will he assure constituents and businesses that they will see lower consumer bills as a result?
Minister reply
This decision provides certainty required to reduce uncertainty, risk premiums, and higher bills. It gives us a platform to work with industry to deliver projects. I urge industries to step up now.
Shadow Comment
Claire Coutinho
Shadow Comment
The Secretary of State's decision to proceed with reformed national pricing reveals a prioritization of wind developers' profits over cutting bills for the British people. His unachievable 2030 targets based on ideology have led to higher electricity costs, with recent auctions securing contracts at £86 per megawatt-hour—almost 15% higher than average costs. This decision will result in higher bills due to increased grid infrastructure costs and constraint payments for wind farms, adding up to billions of pounds annually. The shadow secretary criticises the government's failure to analyse the full system cost of energy dominated by wind and solar, leading to volatile prices instead of cheaper ones.
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