Finance
UK Moves to Weaken Link Between Electricity and Gas Prices
Published by Global Banking & Finance Review®
Posted on April 21, 2026
1 min readLast updated: April 21, 2026
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The UK government plans to reduce the electricity–gas price linkage by offering fixed‑price contracts to older low‑carbon generators—covering about a third of power supply—and increasing the Electricity Generator Levy from 45% to 55% to help lower consumer bills.
UK Moves to Weaken Link Between Electricity and Gas Prices, Raise Levy
Government Plans to Reform Electricity Pricing and Levy Structure
Introduction to the New Measures
LONDON, April 21 (Reuters) - Britain set out plans to try 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.
Details of Fixed Contracts for Renewable Generators
Voluntary Long-Term Fixed Contracts
The government said voluntary long-term fixed contracts would be offered to existing low-carbon generators not on fixed prices so they were not being paid the price of gas. It said this would cover around a third of Britain's power supply.
Increase in Electricity Generator Levy
Levy Rate Adjustment
It also said it would increase the Electricity Generator Levy by raising the rate from 45% to 55%.
Reporting and Editorial Credits
(Reporting by Sarah Young and Kate Holton, Editing by Paul Sandle)
Key Takeaways
- •Voluntary long‑term fixed contracts will be offered to legacy renewable, nuclear and biomass generators not on fixed‑price deals to shield them from volatile gas‑linked revenues (affecting ~33% of power supply)
- •The Electricity Generator Levy will rise from 45% to 55%, targeting exceptional profits from wholesale electricity sold above a benchmark price, with revenues used to cushion consumer energy costs
- •Analysts expect these reforms (decoupling pricing and increasing levies) to pressure utilities reliant on merchant low‑carbon generation and signal a broader shift toward energy market reform
Frequently Asked Questions about UK moves to weaken link between electricity and gas prices
1What changes is the UK making to electricity pricing?
The UK plans to weaken the link between electricity and volatile gas prices by pushing older renewables onto fixed contracts.
2How will older renewable energy generators be affected?
Older renewables not on fixed contracts will be offered voluntary long-term fixed contracts, so they are not paid the gas price.
3What proportion of Britain's power supply will the new contracts cover?
The new contracts will cover around a third of Britain's power supply.
4What is happening to the Electricity Generator Levy?
The Electricity Generator Levy will be increased from 45% to 55%.
5Why is the UK government making these changes?
The changes aim to bring down consumer bills and reduce reliance on volatile gas prices.
