Why is electricity a rip-off?

Mar 20, 2026

A clear take on why UK electricity bills are so high and who benefits from the current pricing rules. An explanation of how cheap renewable and nuclear power are paid at gas prices. A critique of the economic theory that justifies the system and a simple proposal to charge average generation costs instead of the top marginal price.

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INSIGHT

How Marginal Pricing Makes Renewables Pay Gas Rates

The UK regulator buys the cheapest electricity first but charges consumers the price of the most expensive (usually gas) supply.
Gas sets the market price even though wind, solar, hydro and nuclear supply most electricity at lower, guaranteed prices.

INSIGHT

Pricing Based On A Flawed Economic Model

Current pricing follows a microeconomic model that assumes identical firms and a competitive market which doesn't match electricity reality.
Because generators differ and many get guaranteed low prices, the marginal-price rule overcharges consumers.

INSIGHT

Guaranteed Renewable Contracts Are Ignored In Consumer Pricing

Many low-cost generators (wind, solar, nuclear) already have government-guaranteed prices that are lower than gas.
Those known lower prices could be reflected in consumer charges instead of being eclipsed by gas pricing.

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The UK pays the highest electricity prices in Europe — and it doesn't have to. In this video, I explain the electricity pricing scam at the heart of the UK energy crisis and why the government refuses to fix it.

Here's how it works. Electricity is bought from multiple sources — wind, solar, nuclear, hydro, and gas. The cheapest is purchased first, and gas-fired electricity comes last. But the regulator charges every consumer the price of that most expensive gas-generated electricity, even though less than a third of UK power comes from gas most of the time. The rest comes from renewable energy and nuclear at guaranteed, lower prices. You're paying gas prices for wind and solar power — and that is a rip-off.

This system is based on a flawed microeconomic theory that assumes all electricity producers are identical and that the marginal — most expensive — supplier should set the price for everyone. But there is no competitive market in electricity. The electricity system doesn't resemble the assumptions of the model it's priced on. The whole thing is rigged in favour of energy companies, and it is driving the cost of living crisis for households and businesses across the country.

The fix is straightforward: charge consumers the average cost of generating electricity, not the maximum. That single change could cut energy bills by 20 to 25 percent — with no net cost to the government. Yet no politician will act, because 45 years of neoliberal thinking have convinced them that markets must set the price, even when no real market exists.

Meanwhile, public trust in the energy system is falling. Trust in the green transition is falling. And UK electricity costs continue to punish households while energy companies profit from a pricing model that serves no one but them.

If you want to understand why your energy bills are so high and what could actually be done about it, this is the video. Like, subscribe, and share it with anyone struggling with their electricity bill.