Energy Prices: Energy-intensive Industries

Lord Teverson Excerpts

Tuesday 6th May 2025 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, the electricity market operates on the principle of marginal pricing, whereby the wholesale price of electricity is set by the last technology needed to meet overall demand. That is why gas tends to set the price for the market. We are of course looking at this as part of our REMA review that I have referred to. But the faster we decarbonise our energy and move towards clean power, the less gas will have the influence it does in the current system.

[Lord Teverson (LD)]

What lessons has the Minister’s department learned from looking at our competitors, particularly in Europe, which seems to manage this aspect of its energy markets rather better? What lessons have we learned from across the channel?

[Lord Hunt of Kings Heath (Lab)]

My Lords, we have to look at each country, and some subsidise business costs from the Exchequer. There is no easy way through here; one way or another, there are variations in what Governments do, but we have a very tough public financial situation bequeathed by the last Government, in the form of the black hole they left us, so our options are inevitably constrained. We are not complacent; that is why we have this review of our whole energy pricing structure, and we will look at these matters very carefully. I still maintain, and I think the noble Lord would agree, that the best way to energy security and stable prices is to go towards clean power as quickly as we can.