Executive Summary
The proposed Electricity Network Subscription has not been chosen arbitrarily. It is based on an assessment of how Britain’s electricity network is currently funded and how those costs could be recovered more transparently and fairly.
Initial modelling suggests that a £25 per month Tier 1 subscription would generate sufficient revenue to replace the network costs currently recovered through a combination of standing charges and electricity unit prices, while also providing a prudent financial buffer during the transition to the new tariff system.
Unlike today’s standing charge, the subscription would be independently regulated and reviewed annually, with a statutory requirement that it is set no higher than necessary to fund the electricity distribution network.
The Current System
Many consumers believe that the standing charge pays for the electricity network. In reality, this is only part of the picture.
Today, network costs are recovered in two ways:
- Through the daily standing charge.
- Through a network component hidden within every unit (kWh) of electricity consumed.
This means households pay for the network both before they use any electricity and again as they consume it. Because these costs are bundled into the unit price, the true cost of maintaining the electricity network is largely invisible to consumers.
The proposed tariff separates these costs, allowing electricity unit prices to fall while making the cost of maintaining the network transparent.
Revenue Assessment
Using publicly available Ofgem and industry data, a high-level assessment was undertaken.
Current standing charge revenue
Assumptions:
- Approximately 30 million domestic electricity MPANs in Great Britain.
- Average electricity standing charge of approximately 54 pence per day.
This generates approximately:
£5.9 billion per year
Industry data suggests around 60% of the standing charge relates to electricity network costs.
Estimated network revenue recovered through standing charges:
Approximately £3.5 billion per year
Network costs within electricity unit prices
Electricity unit prices also include transmission and distribution charges.
Based on Ofgem’s price cap cost breakdown, it is estimated that approximately:
£3.0 billion per year
of additional domestic network revenue is recovered through electricity consumption.
Total domestic network revenue
Combining both sources gives an estimated domestic network income of:
| Source | Estimated Annual Revenue |
| Network element of standing charges | £3.5 billion |
| Network element within unit prices | £3.0 billion |
| Total | £6.5 billion |
Revenue from the Network Subscription
Assuming:
- 30 million domestic electricity connections.
- Tier 1 subscription of £25 per month.
Annual revenue would be:
30 million × £300 per year
= Approximately £9.0 billion annually
This is intentionally higher than today’s estimated domestic network revenue.
This additional capacity is not intended to generate profits. Instead, it creates a financial buffer during the transition away from standing charges and provides funding for long-term investment in Britain’s electricity infrastructure.
Why Start at £25?
Britain’s electricity network is one of the oldest in Europe.
Much of the local distribution infrastructure was designed decades ago for a world where homes consumed relatively modest amounts of electricity and generated very little themselves.
The transition towards:
- electric vehicles,
- heat pumps,
- rooftop solar,
- battery storage,
- and electrified heating,
means local electricity networks must become more resilient and more flexible over the coming decades.
Beginning with a higher subscription creates confidence that network companies can continue to operate safely while the new tariff structure is introduced nationally.
As efficiencies are realised and infrastructure investment reduces operating costs, the subscription should reduce wherever possible.
Annual Independent Review
The subscription would not be fixed permanently.
Each year, Ofgem (or its successor regulator) would undertake a full review of the costs of operating Britain’s electricity distribution networks.
Legislation would require the regulator to set the subscription at the lowest level consistent with maintaining a safe, reliable and resilient electricity network.
This creates a clear legal duty to protect consumers while ensuring that essential infrastructure remains properly funded.
Unlike today’s standing charge, the methodology used to calculate the subscription would be transparent and published annually.
Investing Any Surplus
Any surplus revenue generated by the subscription would not be distributed as additional profits.
Instead, legislation would require surplus funds to be invested into a dedicated Electricity Network Resilience Fund.
The fund would finance projects that strengthen local electricity networks and reduce long-term operating costs.
Potential investments include:
- replacing ageing cables and transformers,
- increasing network resilience against storms and extreme weather,
- modernising substations,
- improving local grid monitoring,
- supporting undergrounding where appropriate,
- and deploying community-scale battery storage.
Local Battery Storage
One of the most valuable long-term investments would be battery storage installed at local substations.
Today, surplus electricity generated by rooftop solar often travels through the wider electricity network before being consumed elsewhere.
Local battery systems would instead allow excess electricity generated within a community to be stored locally and released during the evening peak.
Benefits include:
- reducing strain on local distribution networks,
- lowering transmission losses,
- reducing expensive peak-time electricity flows,
- improving resilience during faults,
- supporting greater deployment of rooftop solar,
- and reducing the need for costly reinforcement of the wider transmission network.
This approach treats electricity much more like a local resource wherever practical, reducing unnecessary movement of power around the country while making better use of existing infrastructure.
Conclusion
The proposed £25 per month Electricity Network Subscription is based on analysis of current network funding rather than an arbitrary figure.
It is designed to:
- replace the network costs currently recovered through standing charges and unit prices,
- create a transparent method of funding the electricity network,
- support lower electricity unit prices,
- provide a prudent transition buffer,
- finance investment in Britain’s ageing local electricity infrastructure,
- and ensure that any future surplus is reinvested for the benefit of consumers rather than extracted as profit.
Most importantly, the subscription would remain subject to independent annual regulation, with a statutory obligation to keep the charge as low as reasonably possible while maintaining a safe, modern and resilient electricity network for future generations.