Five Levers to Cut Energy Bills and Fix Britain’s Broken Market

We can fix this today, not in ten years

Britain’s energy market doesn’t work for people. We’ve got the highest bills in Europe, while energy companies post record profits. It’s not just unfair, it’s unnecessary.

At Ecotricity we’ve laid out five simple, effective levers the government can pull right now to lower bills, fight inflation and protect jobs – all without costing the Treasury a penny. It’s time to get serious about fixing the system.

1. A fair deal for the North Sea

CFDs (Contracts for Difference) have worked wonders for renewables – giving investors certainty and keeping costs low. So why not use the same model for the North Sea?

A CFD for fossil fuel operators would stabilise prices, protect existing jobs, and stop sudden shutdowns when global markets tank. If we’d done this over the past five years; setting a fair 10% profit cap, consumers would have saved around £10 billion every year.

It’s fair, practical, and politically smart. We could even scrap the toxic windfall tax that dominated the last election and replace it with a system that rewards stability, not volatility.

2. Breaking the gas link

This one’s the big one. Our electricity prices are still linked to the cost of gas, even when our energy comes from wind and sun. In 2023, that link added £43 billion to Britain’s energy bills; £13 billion for households and £30 billion for businesses.

It’s the single biggest reason our bills are so high, and it has a knock-on effect across the economy – pushing up inflation, mortgage rates and the overall cost of living.

The government’s plan is to just "wait it out" until 2030. That’s absurd. Even then, gas will still set the price around 30% of the time. We’ve developed a roadmap to fix this now, breaking the link completely by 2028. That alone would lift 700,000 people out of poverty and cut inflation by over a full percentage point.

3. Controlling monopoly profits

Our regional grid companies the private owners of the wires and pipes that move energy around, make profit margins of up to 40%. These are regulated monopolies, mostly owned offshore, with no real competition and little accountability.

At the same time, Ofgem wants to let them raise prices again, while billions in dividends flow out of the country. It’s Thames Water all over again.

Cap those margins, and we could take hundreds of pounds off every household bill while keeping the investment Britain needs. These networks are vital national infrastructure they should work for us, not for tax havens.

4. A progressive way to tax energy

Energy bills are full of stealth taxes green levies, efficiency funds, and VAT that add around £150 a year to an average bill. They’re flat-rate, which means the poorest pay the same as the richest. That’s not just wrong, it’s backwards.

We can make the system fairer. Give everyone a tax-free band of basic energy - around 2MWh a year – and shift the costs upward to those who consume more and can afford more. Our modelling shows that 80% of people would pay less under this approach, and we’d still fund everything we need.

5. Scrap VAT on energy – and tax flying instead

Energy is essential. Flying is not. Yet we tax heat and light while aviation enjoys a £20 billion subsidy through zero VAT and fuel duty exemptions.

Move that 5% VAT from energy to flying and we help millions struggling with their bills, while asking more from the 10% of Britons who take 50% of all flights. That’s a fair, progressive swap that cuts poverty and emissions at the same time.

A fairer, greener economy

If we pull all five levers, we could almost halve Britain’s energy bills, taking us from the most expensive in Europe to among the cheapest. Inflation would fall, mortgage rates would follow, and the pressure on households would ease overnight.

And the best part? None of it costs government a thing. It just takes the will to act.

We can do this. Fix the market, protect people and speed the shift to green energy. Let’s get on with it…:)