Ofgem Chief Proposes Linking Electricity Prices to Income

In a keynote speech that could reshape how the UK thinks about energy fairness, Ofgem CEO Jonathan Brearley suggested exploring a bold new electricity pricing model based on household income. The proposal would shift the focus away from flat-rate tariffs toward a system where higher earners pay more per unit of electricity. But would this approach improve equity — or risk undermining efforts to reduce overall energy demand and promote renewables?

Brearley argued that the UK’s growing reliance on electricity—from heating to transport—requires a fresh look at fairness. “A world where electricity is at the core of everyone’s lives cannot rely on one-size-fits-all pricing,” he said, calling for a national conversation on how energy is priced.

The idea, still at an early stage, is controversial. It marks a shift away from progressive pricing concepts based on usage, which has traditionally encouraged efficiency and lower consumption. By tying prices to income rather than how much electricity people use, critics warn it could weaken incentives to save energy or adopt more efficient technologies.

It also comes at a time when Ofgem is separately consulting on zonal pricing—a plan to reflect regional differences in the cost of electricity supply. While that model could support more efficient grid use and encourage renewables in lower-cost regions, an income-based system may cut across those aims, focusing instead on wealth redistribution rather than behavioural change or support for clean energy investment.

No detailed framework has yet been proposed for how income-based pricing would work, but it would likely require access to tax or benefits data, raising questions around privacy, complexity, and compatibility with a competitive energy market.