UK Households Could Save £200 a Year Under Radical Public Electricity Procurement Plan, Thinktank Finds
Households in England, Scotland, and Wales could see energy bills drop by nearly £200 a year under a government plan to become the “single buyer” of electricity, according to a new report from the thinktank Common Wealth. The proposal, published on June 10, 2026, comes as average bills are set to rise by more than £200 in July due to the ongoing Iran war and its impact on global gas prices.
The report, authored by Donal Brown, a senior researcher in energy policy at the University of Oxford, argues that Britain’s current electricity market is outdated and designed for a fossil-fuel era, funnelling billions in windfall profits to private generators while households pay some of the highest bills in the world. Under the thinktank’s plan, the government would act as the sole buyer of all power generated, contracting directly with generators and reselling electricity to consumers at cost-effective prices.
“Gas still sets the price for 80% to 90% of the time, while generating only a quarter of our power,” Brown said. “Our proposals would break the link [between gas and electricity prices], contracting directly with generators at cost-effective prices and eliminating wasteful practices such as paying for energy twice when the grid is constrained.”
The report estimates that such a public procurement system could shave billions off electricity prices, with the average household saving around £185 to £200 per year. The plan is part of a broader government effort to delink gas and electricity prices, a policy pushed by Prime Minister Keir Starmer and Energy Secretary Ed Miliband in response to the second energy price shock in less than five years.
Why This Matters: The Stakes of the Iran War and Gas Price Volatility
The urgency of the thinktank’s proposal stems from the immediate crisis facing UK households. The war in Iran has driven a global surge in oil and gas markets, leading to sharp increases in energy costs. Average energy bills are forecast to jump by more than £200 in July, placing further strain on household budgets already squeezed by inflation and the cost-of-living crisis.
Prime Minister Keir Starmer has stressed the need to escape the “fossil fuel rollercoaster,” stating: “When global gas prices spike, people here shouldn’t be picking up the tab. Our focus is simple: easing pressure on household budgets now, while building a homegrown energy system that protects families from global instability in the years ahead.”
Energy Secretary Ed Miliband echoed this sentiment, saying: “As we face the second fossil fuel shock in less than five years, the lesson for our country is clear: The era of fossil fuel security is over, and the era of clean energy security must come of age.”
Currently, the UK’s electricity pricing mechanism is tied to the cost of gas, even though renewable sources like wind and solar now generate a growing share of power. Gas-fired plants set the wholesale price for 80% to 90% of the time, despite generating only about a quarter of the country’s electricity. This means that even when cheap renewables are abundant, consumers do not see the benefit because gas generators dictate the baseline price.
The thinktank’s report highlights that this structure leads to excessive profits for private gas generators, particularly during periods of high price volatility. Under the proposed single-buyer model, the government would bypass this market failure by negotiating contracts with all generators, including gas-fired plants, at fair prices. Gas generators would join a “strategic gas reserve,” where they would be paid to step in only when renewables are underperforming or nuclear reactors are offline, thus reducing their ability to profit from inflated prices.
How the Single-Buyer Model Would Work
The Common Wealth report outlines a detailed mechanism for public procurement of electricity. The government, through a publicly accountable body, would become the sole buyer of all power generated in England, Scotland, and Wales. This entity would negotiate long-term contracts with renewable, nuclear, and gas generators, setting prices that reflect actual production costs rather than volatile global gas markets.
A key feature of the plan is the creation of a “strategic gas reserve.” Gas-fired power stations would be placed on standby, paid a fixed fee to be available when needed but not allowed to set the wholesale price for all electricity. This would prevent gas generators from profiting from scarcity or geopolitical shocks, while ensuring grid reliability.
The report also argues that the current system involves “wasteful practices such as paying for energy twice when the grid is constrained.” In the present market, when transmission lines are congested, grid operators sometimes pay generators to reduce output or turn off, while simultaneously paying others to increase production—a cost ultimately passed to consumers. The single-buyer model could eliminate such inefficiencies by centralising dispatch and pricing decisions.
If implemented, the plan would represent a significant restructuring of the UK’s energy market, which was privatised in the 1990s and has long operated on market-based principles. However, the thinktank argues that the current system is no longer fit for purpose in an era of cheap renewables and global energy instability.
Broader Implications: A Global Energy Crisis and Utility Profits
The UK is not alone in facing soaring electricity costs. In the United States, a similar crisis is unfolding, with retail electricity prices rising 7% in 2025 alone—part of a nearly 40% increase since 2021, the fastest period of electricity price growth on record. The average American household’s monthly electric bill has climbed from roughly $121 in 2021 to $156 today, a nearly 30% increase that outpaces inflation.
A recent report by Ali Velshi and Amel Ahmed highlighted that utility companies in the US are raking in record profits, even as nearly 80 million Americans struggle to pay their bills. The American Economic Liberties Project’s Matt Stoller posed the blunt question: “Where’s all the f&$*#ing money going?” The answer, according to analysts, lies in the regulated utility business model, where profits are tied to capital investment rather than efficient operations. Utilities are seeking $31 billion in rate increases for 2025, more than double the previous year, and have already asked for $9.4 billion in the first quarter of 2026.
While the structural issues differ between the UK and US—the UK’s problem is tied to gas price indexing, while the US faces a system that rewards capital spending—both illustrate a common theme: electricity markets are failing consumers. The UK’s single-buyer proposal could serve as a model for other nations seeking to reform their energy systems, particularly as the world grapples with the fallout from the Iran war and the transition to clean energy.
The thinktank’s report also comes amid a broader political debate about market intervention and public ownership. The Labour government has already signalled its willingness to intervene in energy markets, having previously introduced a windfall tax on oil and gas companies and announced plans to create a publicly owned clean energy company, Great British Energy. The single-buyer model would extend this logic further, effectively nationalising the wholesale electricity market through procurement rather than ownership.
Expert Warnings and the Road Ahead
Despite the bold promises, experts have warned that the government’s current proposals to delink gas and electricity prices may lead to only modest savings unless a more radical approach is taken. The Common Wealth report provides that radical blueprint, but it is likely to face stiff opposition from private generators and free-market advocates.
Critics argue that a single-buyer model could reduce competition and innovation, potentially leading to higher long-term costs. Others note that the government would need to build significant regulatory capacity to manage procurement contracts and ensure fair pricing. The report acknowledges these challenges but contends that the benefits outweigh the risks, particularly in the current crisis environment.
For now, the political momentum appears to be on the side of reform. Prime Minister Starmer and Energy Secretary Miliband have both emphasised the need for clean energy security and lower bills, framing the Iran war as a wake-up call. The thinktank’s proposal gives them a concrete policy option, though it remains to be seen whether the government will adopt it in full or opt for a more moderate approach.
What This Changes for Consumers and the Energy Sector
If implemented, the single-buyer model would transform the relationship between consumers, generators, and the state. Households could expect more stable and lower bills, insulated from the wild swings of global gas markets. Businesses, particularly energy-intensive industries, would also benefit, potentially boosting competitiveness.
The shift would also accelerate the transition to renewable energy. By contracting directly with renewable generators at fixed, cost-effective prices, the government could provide the certainty needed to attract investment in wind, solar, and storage. Currently, renewable projects often struggle to secure financing because their revenues depend on wholesale prices that are heavily influenced by gas. The single-buyer model would eliminate that risk, potentially unlocking billions in clean energy investment.
However, the plan would also disrupt the existing energy industry. Private generators, particularly gas and nuclear operators, would see their profits squeezed as they lose the ability to set prices. Some analysts predict legal challenges and intense lobbying from incumbents. The government will need to manage this transition carefully to avoid supply disruptions.
For the average household, the immediate takeaway is that relief may be on the horizon. With bills set to rise in July, the thinktank’s estimate of £200 in annual savings offers a glimmer of hope. But the path from report to reality is long, and political hurdles remain. The next few months will be critical as the government considers its options, with energy prices likely to remain a defining issue of the year.
In a world marked by geopolitical shocks and climate pressures, the Common Wealth report adds to a growing chorus of voices calling for fundamental reform of electricity markets. Whether the UK becomes a test case for public procurement of power will depend on the government’s willingness to take on vested interests and embrace a new model for the clean energy era.
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