By\u00a0Ben Pile<\/a><\/p>\n\n\n\n Last week, Ofgem announced that the Energy Price Cap would be lowered. From July, average bill payers will see \u201ca decrease of 7% compared to the cap set between April 1st to June 30th, 2025\u201d. The likes of Ed Miliband were quick to capture the good news by reaffirming the Government\u2019s commitment to the 2050 Net Zero and 2030 Clean Power agendas. But a closer look at the detail of the price cut and other news shows just how fragile those agendas really are.<\/p>\n\n\n\n The news that there would be a price cut was not unexpected. Energy price caps are announced quarterly. As reported here<\/a>, the Spring (April-June) price cap rise was announced in February \u2013 the third since the Labour Government was elected in July last year on the promise of \u201clower bills\u201d. \u201cEnergy bills are set to rise again due to a spike in global gas markets,\u201d claimed Ed Miliband ahead of Ofgem\u2019s February rise. But there is no such thing as \u201cglobal gas markets\u201d. And that \u201cspike\u201d had already passed.<\/p>\n\n\n\n A post-pandemic low price of gas on UK markets had occurred in February 2024 at around 56p per therm (29.3 kWh). But over the next year, this price increased to 142p, peaking on February 11th. On February 25th, Ofgem announced<\/a> a 6.4% price cap increase for the second quarter of this year. But by the time of Ofgem\u2019s announcement, a mere fortnight later, the price had fallen to 106p \u2013 a fall of 25%. Into the second quarter, the price fell further, reaching a low of 69p \u2013 or less than half of February\u2019s spike price \u2013 on April 7th. The price then stabilised at around 83p (around 42% of the peak price).<\/p>\n\n\n\n \u201cIt\u2019s great news the energy price cap is going down, but we have more to do\u201d, tweeted Ed Milband<\/a> in response to last week\u2019s announcement<\/a> from Ofgem \u2013 as if he and his policies had caused the price drop. \u201cOur clean power mission is the route to long-term energy security and lower bills,\u201d he added. Odd, isn\u2019t it, that a 6.4% increase in the cap was blamed on (non-existent) \u201cglobal gas markets\u201d, but that a 7% drop in the cap, following a 42% reduction in UK gas prices, is not blamed on the same outside forces, but is instead given as cause to double down on the green agenda.<\/p>\n\n\n\n The clues are there for those whose capacity for simple maths is not hindered by green ideology\u2026 a 42% reduction in UK gas prices<\/em> yielded only a 7% drop in the energy price cap<\/em>. But doesn\u2019t Miliband tell us that \u201cglobal gas prices\u201d are the cause of all our problems? <\/p>\n\n\n\n And not just Milband. In the Times<\/em>, the Green Blob\u2019s favourite du jour <\/em>talking point is reproduced uncritically<\/a> by the newspaper\u2019s Energy Editor, Emily Gosden. \u201cUnlinking electricity prices from gas \u2018would cut energy bills\u2019,\u201d claims the headline. According to this meme, remastered by energy market consultant Adam Bell, formerly Head of Energy Strategy at BEIS and Senior Policy Advisor at DECC, the \u201clink\u201d between gas prices and electricity prices could be \u201ccut\u201d. According to the article, \u201cBritain\u2019s wholesale market operates on a system of \u2018marginal pricing\u2019 whereby the most expensive plant needed to keep the lights on determines the price all generators are paid\u201d.<\/p>\n\n\n\n This meme is now the go-to claim for anyone trying to counter Net Zero-critical commentary and analysis. On X, fancy-dress energy tycoon Dale Vince claimed<\/a> \u201cWe need to \u2018Break the link\u2019 between gas and electricity prices now\u201d. The problems, though, are obvious\u2026 <\/p>\n\n\n\n Perhaps they are not obvious to Times<\/em> journalists. But the likes of Vince and Bell are not disinterested parties. Vince\u2019s interests in pushing gas out of the market are obvious. Bell, for his part, worked in government departments that manifestly caused this crisis in the first place, and so ought to be the last person to consult on fixing it. Moreover, prior to his energy policy roles in DECC and BEIS, Bell worked for green energy sector lobbyists RenewableUK and Westminster pressure group, the Green Alliance. The latter\u2019s interventions, though not necessarily anything to do with Bell, ought nonetheless to orient journalists\u2019 understanding. As the energy price crisis began to make itself known in late Summer 2021, the Green Alliance launched<\/a> a campaign demanding the Government increase the VAT on domestic gas from 5% to the standard 20% rate \u2013 the equivalent of demanding MORE HYPOTHERMIA NOW!<\/em><\/p>\n\n\n\n That is to say that greens, be they wonks, lobbyists, ideologues or MPs, are callous and not in the least bit concerned with rising prices for any other reason than it being bad PR. And the sleight-of-hand that such Blobbers use to pull the wool over the eyes of journalists \u2013 who need little persuasion to abandon their own critical faculties \u2013 is to speak glibly about the wholesale market.<\/p>\n\n\n\n The problem is that domestic consumers do not pay wholesale prices for energy. Fancy-pants accounts of how \u201cgas sets the price of electricity\u201d, and how \u201cbreaking the link\u201d would help, are misdirection. Gas is last in the merit order that determines wholesale electricity prices because policy requires that renewable energy generators have priority access to the grid. In a normal world, that \u201cmerit order\u201d would be based on price. But the price that wind and solar farms get paid for the power they produce is not the same as the prices that appear on the wholesale market \u2013 the subsidies are tacked on, at some point between the wholesale and retail markets.<\/p>\n\n\n\n The lie can be exposed more clearly in a chart comparing wholesale and retail prices, thanks to Ofgem\u2019s price cap since it came into effect on January 1st, 2019. This includes caps for the individual prices of electricity and gas. These are shown in the following chart, as is the \u201csystem average price\u201d (SAP) of gas \u2013 i.e. the wholesale price of gas on the UK\u2019s gas markets.<\/p>\n\n\n\n From April, electricity (shown in purple) was capped at 27p per kWh, and gas (red) capped at 7p per kWh. Underneath, the wholesale price of gas (in blue) can be seen falling from its February 2025 recent peak to just over half of that. Yet even the gas price cap fell just 9%, and the electricity cap less than 5%. Moreover, the electricity cap is four times higher than the gas cap. And even more moreover, the most recent price of gas, at about 2.8p per kWh, is barely more than a tenth of the current electricity price cap. If gas is more expensive than renewable energy, how can we be paying close to 1,000% of the wholesale price of gas for the equivalent electricity?<\/p>\n\n\n\n The conversion of gas into electricity is about 50% efficient (though the most advanced generators are 60% efficient). This means that the fuel costs of gas-fired power stations were just 5.6p\/kWh during April \u2013 or just under a fifth of the electricity price cap. At the most recent auction for electricity supply contracts, solar farms won bids to supply electricity at 7.1p\/kWh and offshore wind at 8.4p. And these prices do not take into account the cost of backup when there is no sun and no wind, or the cost of compensating operators when there is too much solar power or wind, or the other costs of balancing the grid and the hugely expensive network upgrades that are required to connect so many trickles of power to the grid.<\/p>\n\n\n\n Whinges from green tycoons and eco-wonks, reproduced by the supplicant press, that gas is \u201csetting the price of electricity\u201d are clearly simply lies, therefore. And it gets worse. Doubt was cast over the seemingly low prices that were achieved at the most recent auction when Danish wind developer giant Orsted cancelled its involvement in the Hornsea 4 wind farm project, as I discussed in my recent article<\/a>. The green sector has deteriorated further since then. Last week, the Guardian<\/em> reported<\/a> that SSE had cut its \u201cfive-year investment plans by \u00a33 billion blaming policy and planning delays\u201d. Outgoing executive, Alistair Phillips-Davies, said the Guardian<\/em> \u201ccalled for stable market conditions and low risk to support its ambitions\u201d. <\/p>\n\n\n\n I bet he did. But a quarter of a century of almost completely unopposed government policy has sought to create these \u201cstable market conditions\u201d for renewable developers and investors. Indeed, the point of the CfD subsidy scheme was to eliminate all market volatility and guarantee prices at above the average price of power from gas to developers. We have been bent over backwards by such policies and had our domestic finances raided to ensure stability for them. No stability for us.<\/p>\n\n\n\n![\"\"](\"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/05\/0hero-homepage-tip-energy-price-cap-predicted-to-rise-bills-horrific-1.jpeg?resize=723%2C406&ssl=1\")
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