Getting electricity down to 15p/kWh does not mean the costs of the electricity system disappear. It means changing where those costs sit, who pays them, and how much profit can reasonably be extracted from an essential service.
We are not claiming that absolutely everyone will pay less under every part of our proposal. Some households and some businesses will pay more. We think that is defensible because the objective is to create a fairer, cheaper and more productive electricity system overall.
Network costs: equalising what households pay
We replace the regional standing charge with a national Network Access Charge.
That means there will inevitably be winners and losers compared with today’s standing charges.
Households currently paying some of the country’s highest standing charges would see their fixed network cost fall. Some households in cheaper regions could see their fixed charge increase.
But the Network Access Charge cannot be considered in isolation.
The important figure is the total electricity bill.
By removing network costs and policy costs from the unit price and reducing the standard electricity price towards 15p/kWh, the majority of ordinary households should see their overall electricity costs fall even where their fixed network payment increases.
It also ends the postcode lottery in which two otherwise identical households can pay different fixed charges simply because they live in different parts of Great Britain.
Higher users will contribute more
We also make no apology for asking exceptionally high electricity users to contribute more towards the network.
A household consuming substantially more electricity places greater demands on generation and network capacity than a low-usage household.
Our system therefore includes higher Network Access Charges for very high consumption.
We think that is a reasonable principle: those who make greater use of the electricity system should contribute more towards maintaining it.
Importantly, this is not about penalising electrification. Our tariff is specifically designed to make electric heating, EV charging and flexible consumption considerably cheaper through allowances and low off-peak prices.
It is about ensuring that exceptionally high consumption does not result in everyone else subsidising the network capacity required to support it.
Policy costs: we all contribute
Some existing electricity policy costs would move into general taxation.
They do not disappear.
Instead of recovering historic and national policy commitments disproportionately through electricity bills, they would be funded in the same way that we fund other national priorities.
That means people would contribute according to the wider tax system.
Some taxpayers will contribute more than they currently do through their electricity bill and others will contribute less.
That is normal.
We do not attempt to calculate whether every taxpayer receives precisely the same monetary value from every pound of taxation they contribute. Education, defence, healthcare, transport and thousands of other government programmes are funded collectively.
National energy policy should be treated in much the same way.
And there is an important additional benefit: removing these costs from electricity makes electrification more attractive. It improves the economics of heat pumps, EVs and replacing fossil-fuel consumption with domestically generated electricity.
Private companies will have to accept lower returns
There is another group that will contribute to reducing electricity prices: companies currently extracting excessive returns from the system.
Yes, some profits will fall.
We are comfortable saying that.
Our policy does not propose eliminating private enterprise from electricity. Suppliers, generators, infrastructure companies and investors must be able to earn reasonable returns or attract investment.
But an essential national service cannot become a mechanism for unlimited profit extraction while households and businesses struggle with some of the highest electricity prices in the developed world.
Regulated and government-contracted industries routinely operate within agreed returns, margins and contractual structures.
Energy should be no different.
Companies providing an efficient service should be able to make money.
What they should not have is an unlimited claim on consumers’ electricity bills.
The objective is not that nobody loses. It is that Britain wins.
There will therefore be individual losers from reform.
Some high-consumption households will pay more towards network access.
Some taxpayers will contribute more towards historic policy commitments.
Some energy companies and investors will receive lower returns.
But concentrating solely on those losses misses the much larger economic opportunity.
Cheap electricity benefits almost everything.
Households with lower energy bills have more disposable income to spend elsewhere in the economy.
Businesses with lower electricity costs become more competitive, can invest more, and have greater scope to reduce prices.
Electric heating becomes cheaper.
Electric transport becomes cheaper.
British manufacturing becomes more competitive.
Electrification reduces our exposure to imported fossil fuels.
And greater electricity consumption spreads the cost of our enormous electricity infrastructure across more useful energy.
Our objective is therefore bigger than producing a cheaper electricity bill.
We want affordable electricity to become an economic advantage for Britain.
That requires making choices about who pays, what constitutes a reasonable return, and which costs genuinely belong on an electricity bill.
We are prepared to make those choices — and defend them.