Conservatives announce Cheap Power Plan to slash electricity bills by a fifth

Today [Monday 6^th October 2025] the Conservatives have announced the first two measures in their ‘Cheap Power Plan' - to deliver £165 off the average household bill. 

In a speech today Shadow Energy Secretary Claire Coutinho MP committed the Conservative Party to unashamedly prioritising cheap energy, rather than arbitrary climate targets, in order to reduce the cost of energy for families and business.  

That is why the Conservatives have launched this new plan – and are starting by announcing they will Axe the Carbon Tax on electricity generation and scrap the Renewable Obligation subsidy scheme.  

The Carbon Tax currently makes up around a third of wholesale electricity prices, artificially inflating the price of electricity and forcing up everyone's energy bills in the process.  

The Carbon Tax also increases the price paid to other non-gas electricity sources like wind and solar, pushing up profits of wind and solar generators at the expense of consumers. 

This is all added to people's bills and that leaves everyone worse off. Especially when compounded with the fact that Labour's decision to align with the EU Carbon Tax has increased the UK's Carbon Tax by 70% since January 2025. 

Our plan to Axe the Carbon Tax,  which does nothing to help improve our environment or reduce emissions, will save the average household £75 on their electricity bills. 

The Conservatives will also scrap Ed Miliband's rip off renewable subsidies, the Renewable Obligation Certificate Scheme (ROC). 

Launched by Labour in 2002, and doubled by Ed Miliband in 2008, the subsidies mean renewable energy producers receive significantly above market payments for their electricity – up to three times more than the market price of electricity. 

Consumers are then forced to pay for these extortionate prices through their energy bills.  

That is why the next Conservative government will use primary legislation to repeal this subsidy scheme, which will reduce the average household's electricity bills by £90. 

Together, axing the Carbon Tax and scrapping Ed Miliband's old wind subsidies will cut the average household electricity bill – currently just over £850 - by £165, and also help to reduce emissions by maximising consumer choice. Decarbonisation will progress by innovation driving electrification (for instance in transport), but those products need to be cheaper to run to encourage people to adopt them – so it makes no sense to keep the price of electricity artificially high. 

This latest announcement demonstrates the Conservative Party's commitment to delivering the cheap energy our families and businesses need, and to ensuring a strong economy for this country.  

It comes following Kemi Badenoch's new approach to Net Zero, and the Party's pledge to scrap the Climate Change Act, to ensure that ministers are able to focus on delivering growth rather than having their hands bound by unaccountable quangos and counterproductive targets. 

In her speech to Conservative Party Conference, Claire Coutinho MP said: 

“Increasing the cost of electricity is the worst possible climate policy too. 

If you want people to use electric cars, here's a revolutionary idea. Make electricity cheap. 

If you want people to use electric heating. Make electricity cheap.  

If you want to build data centres, to cut bills, and drive growth… 

Make. Electricity. Cheap. 

So I can promise you this. When it comes to energy policy, our priority won't be ideology. It won't be vested interests. It won't be fake promises we can't deliver.  

It will be cheap, reliable, abundant energy.” 

ENDS 

Notes to Editors

·       Britain's domestic electricity prices are the second highest in the world. Official figures published by DESNZ show Britain's domestic energy prices are the second highest in the world – behind only Germany – at 30.45p per kWh. In France, the equivalent price was 23.7p, while in the US it was 12.9p (DESNZ, Energy Prices: International Comparisons, 30 September 2025, link). 

·       12.1 million households in Britain struggle to pay their energy bills. Research by the University of York found that 12.1 million households in England struggle to pay their energy bills, with 43 per cent spending more than 10 per cent of their household income on energy bills. Almost 5 million households spend more than 20 per cent of their income on energy bills (End Fuel Poverty Coalition, 26 August 2025, link). 

·       Britain's industrial electricity prices are the highest in the world. On price per kWh, Britain's electricity prices are the most expensive in the G7 and EU and 46 per cent higher than the median. Industrial electricity prices are four times as expensive as the US and 50 per cent more expensive than France and Germany (DESNZ, International Industrial Energy Prices, 30 September 2025, link). 

·       Almost half of the cost of producing electricity in Britain is a result of Net Zero spending, taxes and levies. Research by the Renewable Energy Foundation found that the equivalent of 40 per cent of the cost of producing electricity in Britain, £22 billion a year, is paying for the costs of renewables and Net Zero, including various renewable subsidies, the Carbon Tax, backup for when renewables cannot generate power, paying wind farms to switch off when it's too windy, and the cost of building the pylons required to connect renewables to the grid. All of these costs are recovered through our energy bills (Renewable Energy Foundation, UK Renewable Electricity Subsidy Totals: 2002 to the Present Day, accessed 26 September 2025, link). 

·       A third of the wholesale price of electricity is the Carbon Tax. The Carbon Tax, comprised of the Emissions Trading Scheme and Carbon Price Support, accounts for around a third of the wholesale cost of electricity. Both the Climate Change Committee and the Department for Energy Security and Net Zero accept that the Carbon Tax increases the wholesale price of electricity. This is a policy choice designed to aid the transition to Net Zero (Ember, European electricity prices and costs, accessed 26 September 2025, link; Climate Change Committee, Energy Prices and Bills: Annex, March 2017, link; DESNZ, Form, 19 September 2025, link). 

·       Labour's decision to align with the EU's Carbon Tax scheme has increased the UK Carbon Tax by 70% in the space of 9 months – pushing up every family's energy bills by stealth. The UK Carbon tax was around £33 (per tonne of CO2) on 23^rd January 2025, before briefings to the media that the Government's EU realignment deal would involve linking the UK and EU Carbon Tax schemes. The prices converged when this news was released, and the UK Carbon Tax is now around £57 (The Financial Times, 28 January 2025, link; ICE, UKA Futures, accessed 5 October 2025, link). 

·       The Renewable Obligation subsidy scheme has increased electricity bills by over £67 billion. Families and businesses have spent at least £67 billion subsidising renewables through the ROC scheme since 2002 (Ofgem, Renewables Obligation: Annual Report, March 2025, link). 

·       Ed Miliband's decision to double the subsidies for offshore wind means many wind farm developers are paid almost three times the market price for their output. The average wholesale electricity price in 2024 was around £72 per MWh. The ROC subsidy rate is £67.06 per ROC. Many offshore wind farms are entitled to two ROCs per MWh on top of the market price, meaning they are paid £206 per MWh for every unit of electricity. For comparison, the cost of electricity from gas without a Carbon Tax is around £55 per MWh (Ofgem, Renewables Obligation, 18 February 2025, link).