Published by Global Banking & Finance Review®
Posted on July 30, 2025
2 min readLast updated: January 22, 2026
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Ofgem reviews UK's energy pricing to adapt to renewables, aiming to reduce gas reliance and ensure fair costs for all consumers.
OSLO (Reuters) -Britain's energy regulator Ofgem on Wednesday announced a review into how costs are allocated across the energy system, including alternative pricing models for consumers, to better adapt to more renewable energy supply.
Britain has a target to largely decarbonise its power sector by 2030 which will mean reducing its reliance on gas-fired power plants and rapidly increasing its renewable power capacity.
Less reliance on the price of gas is expected to bring down the variable costs of the energy system, Ofgem said.
"However, fixed costs, such as those needed to upgrade the energy network to deliver cleaner and more secure power to our homes – could rise," Ofgem chied executive Jonathan Brearley said in a statement.
Under the current regimes, system costs are paid for by energy system users and consumers through their energy bills, with separate stand-alone bills for electricity and gas.
Given the expected system changes and increasing proportion of energy costs on household bills than previously, now was the right time to look at potential alternative models in how bill-payers are charged, Ofgem said.
This included ensuring that increased fixed costs do not disproportionately affect vulnerable and low-income consumers, it added.
The regulator stressed that it is only seeking views at this point and is not recommending any specific option.
(Reporting by Nora Buli in Oslo; editing by Nina Chestney)
Ofgem announced a review into how costs are allocated across the energy system, including alternative pricing models for consumers.
Britain aims to largely decarbonise its power sector by 2030, reducing reliance on gas-fired power plants and increasing renewable power capacity.
While reduced reliance on gas is expected to lower variable costs, fixed costs for upgrading the energy network may rise, affecting consumer bills.
Ofgem highlighted the need to ensure that increased fixed costs do not disproportionately affect vulnerable and low-income consumers.
At this stage, Ofgem is only seeking views and is not recommending any specific pricing options.
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