Richard MurphyMar 17
Why gas sets the price of electricity, and why the economics behind it makes no sense https://www.taxresearch.org.uk/Blog/2026/03/17/why-gas-sets-the-price-of-electricity-and-why-the-economics-behind-it-makes-no-sense/
Why gas sets the price of electricity, and why the economics behind it makes no sense

The way electricity prices are determined in the UK is widely misunderstood. Many people assume the price reflects the cost of producing electricity from the cheapest available sources. It does not. Instead, the price is commonly determined by the most expensive generator required to meet demand, which, in the UK, is...

Funding the Future
Show threadChristine Burns MBE 🏳️‍⚧️📚⧖Mar 17
@RichardJMurphy There appears to be a mysterious force stopping Ed Milliband from altering this. Regional pricing would have been a step in the right direction, heavily favoured by energy retailers like Octopus, but it was not to be. Is it the Treasury? Is it fear that the fossil generation sector would hold the system to ransom (in which case the answer would be to nationalise them). In fact is it not obvious that it could be immediately solved by nationalising generation?
Show threadPeter Brown
@christineburns @RichardJMurphy they will NOT agree to regional pricing because the movers and shakers are in London and they would end up paying more whereas at the moment London pays less than where the electricity is generated (in Scotland).
That’s why they’re plugging this idea of energy clubs to try and take the heat off it. But it doesn’t make a huge difference to prices as the starting point is still the price of gas.
Mar 17 at 9:06amWeb
Show threadChristine Burns MBE 🏳️‍⚧️📚⧖Mar 17
@peterbrown @RichardJMurphy There is a price premium that the Southern Jessie NIMBYs ought to be exposed to. The thing is that North West and North East England and the whole of Scotland DO regularly have times when gas wouldn’t set the wholesale price. . In fact I can’t remember if there is still a gas fired power station left here. To have substantially cheaper electricity would be a great draw to business.
Show threadPeter BrownMar 17
@christineburns @RichardJMurphy Scotland is currently on 130% renewable electricity with a very substantial surplus going south of the border but we don’t get the financial benefit at all.
Same for gas. The cheapest place for gas should be the areas around Aberdeen, but of course they couldn’t have that. Gas is charged at the same price everywhere.
Unless of course you’re eg. in rural Scotland without mains gas and you pay through the nose for bottled gas or heating oil.
Show threadbeakermanMar 17

@peterbrown @christineburns @RichardJMurphy

BUT WE ARE A UNION OF EQUALS
and the scales from our eyes are falling🏴󠁧󠁢󠁷󠁬󠁳󠁿