In April 2022, the then-Conservative government launched a "review of electricity market arrangements", known by its acronym REMA, and ran the first consultation in July that year1. The review covers the market rules that set wholesale electricity prices in Great Britain.
A summary of responses to the first consultation was published in March 2023, with the government deciding to rule out a number of options, including "pay-as-bid"1. A second consultation followed in March 2024, with the results published alongside the REMA autumn update in December 20241. That stage narrowed the options further, ruling out both the "green power pool" and split market options, both of which would have created a separate market for renewables1.
The review sits against a market in which gas sets the wholesale price of electricity in the UK 98% of the time, according to academic research published in 2023, far more often than in France (7%) or Germany (24%), even though gas accounts for only about a third of generation1. Under the marginal pricing system used in the UK, all plants running in each half-hour period are paid the same price, set by the final generator needed to meet demand1.
Under the latest Ofgem price cap, the average household faces an electricity bill of £926 per year, up from £603 before the energy crisis, a rise of 54%1. Wholesale costs make up 38% of the current cap, network charges 22%, green levies 15% and social policies 4%, with operating costs (14%), profits (2%) and other items making up the rest1. Gas prices remain three times higher than before the global energy crisis as of May 20251.
"In April 2022, the then-Conservative government launched a 'review of electricity market arrangements', known by its acronym REMA. It ran the first consultation in July that year"
Why it matters for households
The review concerns the mechanism that translates gas prices into household electricity prices. Because gas sets the wholesale price almost all of the time, the cost of gas fired generation determines what is paid for all electricity, including power from cheaper sources1. That link is the main reason wholesale costs are the largest single component of the price cap, and why the cap rose from £603 to £926 for average households1.
The options ruled out so far would have separated renewables from the main market; the government has not adopted them1. The regulation and policy guide sets out how such reviews fit with wider rules, and the Contracts for Difference page explains how low-carbon generation is funded separately from wholesale prices. Network charges, part of the national supply picture, are also affected by costs arising from supplier failures during the energy crisis1.
What happens next
The government is expected to make a decision on whether to switch to zonal power pricing ahead of the seventh Contracts for Difference allocation round in summer 20251. An industrial strategy is set to be published in June1. No further REMA consultation dates have been reported1.