PARLIAMENTARY WRITTEN QUESTION
Energy: Prices (28 March 2023)

To ask the Secretary of State for Energy Security and Net Zero, what assessment he has made of the potential merits of reforming the wholesale energy market to replace the merit order with an average trading price for electricity.

Asked by:
Andrew Western (Labour)

Like all commodities markets globally, the wholesale electricity market works through marginal pricing, where the price is set by the additional unit needed to meet overall demand. This provides a signal of the value of consuming or generating an additional unit at any given time, on which both operational and investment decisions can be made.

As part of the Review of Electricity Market Arrangements (REMA) programme, the Government is considering a range of potential options to maintain the benefits of marginal pricing, while shielding consumers from the impacts of potential future commodity price spikes and ensuring they benefit from lower cost renewables.

Answered by:
Graham Stuart (Conservative)
17 April 2023