A new report by the Institute for Fiscal Studies (IFS) and the London School of Economics (LSE), funded by the Nuffield Foundation as part of the IFS Green Budget, suggests that UK households could save money on their electricity bills if the government encourages the use of flexible, time-based pricing models. These models would allow electricity prices to vary depending on the time of day or season, reflecting the actual cost of generating power. Currently, most households pay flat rates that do not consider the fluctuating costs of electricity generation, which vary by location and time. The report highlights that in Scotland, wind power is so abundant—often generated by strong and consistent winds—that electricity is effectively free in some periods. This surplus can even force grid operators to pay wind farms to reduce output to avoid overloading the system. In contrast, during peak times in southern England, expensive gas-fired power plants are used to meet high demand, driving up costs. The study points out that these regional and temporal differences in generation costs are not reflected in the current flat-rate electricity tariffs used by most households. While the government has ruled out creating local electricity markets or zonal pricing systems, the report proposes other ways to better align customer charges with the actual cost of generating electricity. One suggestion is to shift standard domestic electricity tariffs to time-varying pricing by default. Other proposals include offering larger financial incentives for installing electric heat pumps in areas where low-cost renewable energy is available and increasing subsidies for solar panels in regions where gas is more commonly used to meet demand. By adjusting household electricity bills to reflect real-time market conditions, consumers could be motivated to shift their usage to off-peak hours—such as charging electric vehicles or running appliances when electricity is cheapest. This could lead to lower overall bills for households and help ease the cost-of-living crisis. The report also highlights that improving the efficiency of the UK's electricity system could reduce the financial burden on consumers. The report forecasts that the costs of balancing power supply with national demand could double to £7 billion by the end of the decade. It also suggests that a more balanced approach to achieving net zero emissions—reducing the reliance on rapid decarbonisation of electricity over the next few years—could lower the overall cost of reaching climate goals. According to Bobbie Upton, a co-author of the report, promoting the adoption of time-varying electricity prices could lead to significant savings for consumers with little cost to the government, depending on how actively people adjust their usage patterns. Mark Franks, director of welfare at the Nuffield Foundation, emphasized that electricity prices affect all households but are especially critical for low-income families. For these households, energy costs make up a much larger share of their budgets, and uncertainty about future price increases adds to their financial stress. He urged the government to carefully consider any viable options for reducing these costs, particularly for the most vulnerable households.