New Prime Minister can slash household energy bills by almost £200 a year by fixing Britain’s broken electricity market
One year after ministers rejected electricity market reform, families and businesses are still waiting for lower bills
Every household could save c. £190 a year on electricity bills if the government brought in wholesale market reform and moved levies into general taxation
Businesses and industry could save an additional £6bn a year through market reform – unlocking total savings of £83bn by 2050
Market changes would unlock £30bn in savings on future grid upgrades by 2050, with a further £20bn from smart grid flexibility
Levies could be reformed almost immediately. Reforming the wholesale market could be done by 2029 – delaying the move would see families & firms paying more for longer
London, 17th July 2026 – Britain's new Prime Minister has the chance to knock almost £190 off every household’s annual electricity bill by reversing one of the previous government's biggest energy decisions and moving levies into general taxation.
One year after Ministers rejected plans to overhaul Britain's electricity market, households and businesses are still paying more than they need to – with bills on track to rise by another £100 by the end of the decade without wholesale market reform.
New independent analysis by FTI, commissioned by Octopus Energy, shows overhauling the market and introducing a system that is already used successfully in many OECD countries would cut the bill of every home and business in the country, with a typical household saving up to £114 a year.*
Families could save a FURTHER £75 a year on electricity bills if the government shifted levies into general taxation, with higher earners picking up more of the cost through the tax system.**
Businesses and industry could save an additional £6 billion a year through market reform – unlocking total savings of up to £83 billion by 2050.
Because reforming Britain's electricity market would take two years, Octopus urges the new Prime Minister to act quickly so households can start seeing lower bills as soon as possible.
Why are bills so high?
Britain’s electricity market is wasting billions. The one-size-fits-all design means expensive gas often sets the price even when cheap renewable power is available.
Because the market lacks local price signals, it rewards the wrong behaviour – and consumers pay for it.
Britain switches off its wind farms when they could be generating, discharges batteries when they should be charging, and tells interconnectors to import when they should be exporting.*** It also means we’re locking in billions for new power lines that aren’t needed.
The biggest waste is paying wind farms to switch off because the grid can’t transport all the power they produce, while firing up expensive gas power plants elsewhere instead. This added £1.5 billion to household energy bills last year alone and is forecast to rise up to £10 billion a year by 2030 unless the system is changed.****
A new market design would make the system more efficient, unlock the full potential of wind, batteries, interconnectors and flexible demand, cut unnecessary grid upgrades to the tune of £30 billion over 21 years, while making it easier to drive Clean Power 2030 – all while lowering costs for everyone. A further £20 billion could be saved, according to Octopus estimates, if the full potential of smart grid flexibility was unlocked.
Greg Jackson, Founder and CEO of Octopus Energy, said: "The new Prime Minister has a golden opportunity to change the direction of energy bills, boosting electrification and slashing costs for families and businesses.
“It’s clear that market reform was rejected without a Plan B, and that the path we are currently on will see bills rise for years to come. Reversing that will put us in line with many OECD countries, cutting costs for everyone without sacrificing clean energy ambitions.
“Indeed, it’ll enable us to get more out of wind farms and pay less, and end the chaos which currently sees British batteries charge when they should discharge, interconnectors import electricity when we have surpluses and export when we have none to spare, and pay eye-watering amounts to gas plants to try to balance this.”
ENDS
Notes to editors:
*FTI report ‘REMA: One Year On - Updated Assessment of the Impact of Locational Pricing in Great Britain’
**The £75 includes levies for the Warm Homes Discount, Renewable Obligations, Sizewell C, Network Charging Compensation, AAHEDC and the Feed-in-Tariff.
***French consumers are benefitting from cheap imports from Britain via interconnectors, valued at around £3 billion per year, which Britain could have avoided with local price signals. Correcting this inefficiency adds over £1.2 billion a year to British energy bills. [FTI]
****UK Government, Reformed National Pricing 2026
Press Contacts
Octopus Energy Group
press@octoenergy.com
+44 (0)20 4530 8369
About Octopus Energy Group
Octopus Energy is a global clean energy and technology business, driving the affordable, green energy system of the future. Under its own retail brand, Octopus delivers world-class customer service and cutting-edge energy products to 11 million households globally.
The company is driving the electrification of heat and transport through smart tariffs and innovative clean tech, with operations spanning 27 countries and the entire energy value chain. It operates a £7 billion renewables portfolio as well as thriving EV leasing, heat pump, and solar businesses.
Backed by pension funds, investors and energy giants, Octopus Energy Group businesses deliver cheaper, greener energy and cutting-edge tech to countries and customers worldwide.
For more information, check out our website.