Octopus Energy has called on incoming prime minister Andy Burnham to overhaul Britain’s electricity market, claiming the reforms could reduce average household bills by up to £189 annually.
The energy supplier argued that reforming wholesale electricity pricing alone would save households around £114 a year, delivering significant relief to millions of bill payers across the country.
Octopus also called for energy levies to be moved off electricity bills and into general taxation, a change it said would cut a further £75 from annual household costs.
The proposals arrive as Burnham prepares to enter Downing Street on Monday, with lower energy bills sitting at the centre of his plans to address the cost of living crisis.
Burnham is considering a range of measures, including removing VAT from energy bills, moving older renewable projects onto fixed-price contracts, and introducing an “affordable energy guarantee” for consumers.
That guarantee would give every household access to a cheaper rate for an essential amount of electricity and gas, providing a baseline of affordability for lower-income families.
Octopus said the current electricity market forces consumers to pay gas-linked prices even when cheaper renewable electricity is available, a structural problem it wants Burnham to address urgently.
The supplier estimated those market rules added £1.5bn to household bills last year and warned that figure could rise to £10bn a year by 2030 without meaningful reform.
The company acknowledged the reforms would take around two years to deliver, but said wider market changes could save households and businesses billions over the coming decades.
The intervention adds to mounting pressure from across the energy sector, with trade bodies joining calls for fundamental changes to how electricity costs are structured in Britain.
In a letter to Burnham, the Nuclear Industry Association and other trade bodies said electricity prices had become a barrier to economic growth and the transition to cleaner energy.
“The energy transition will only succeed if it is practical, fair and felt by the public as a source of better jobs, stronger communities and lower bills,” they said.
The groups urged Burnham to consider shifting energy policy costs into general taxation, arguing it would encourage households to adopt heat pumps and electric vehicles more rapidly.
A joint report from the CBI and Energy UK found that Britain’s industrial electricity prices are around 45 per cent higher than the G7 average, putting domestic businesses at a serious competitive disadvantage.
Energy UK chief executive Dhara Vyas said: “Energy is an essential service that underpins both daily life and economic growth.”
Vyas added: “Yet years of making policy decisions with little regard to business energy users have left the UK with some of the highest industrial energy costs in the developed world.”
Beyond energy, Burnham is expected to announce lower bus fares, plans to bring water and energy companies into public ownership, and the biggest council house-building programme since the post-war period.