Electricity prices in the UK are high because of the "insane" wholesale market, Parliament has been told.
The situation was branded "mad" by businessman and chartered accountant Lord Vaux of Harrowden, who urged an end to setting the amount "at the highest cost generator".
The Government has argued the push to homegrown clean energy will protect consumers against volatile global oil and gas prices while Tory critics have blamed the domestic green transition for pushing up prices.
The UK’s reliance on imported gas has been steadily decreasing over the last decade because of its rollout of wind and solar power, making its electricity supply ’more British’.
Last year, just under half of Britain’s electricity supply was powered by foreign energy imports, said researchers at the Energy and Climate Intelligence Unit (ECIU), down from 65% in 2014.
The figures come as energy security is increasingly in the spotlight in the UK, after the bills crisis in 2022 and 2023 caused primarily by spiking international gas prices after Russia’s invasion of Ukraine.
Experts say if the UK had been less reliant on imported energy, prices would not have jumped as high.
Speaking at Westminster as the Government was pressed over action to help struggling households, Lord Vaux said: "One of the main reasons why electricity prices are so high is the bizarre way the wholesale market works.
"If I need to buy 10 pints of milk, so I go to my supermarket, where they are 95p each but it has only nine, and then buy the 10th pint from the corner shop for £2, I do not have to go back to the supermarket and pay the difference so that all 10 cost me £2 each.
"That would clearly be insane. But that is exactly how the electricity wholesale market works.
"Does the minister agree that that is mad and that it is time we stopped setting the wholesale price at the highest cost generator in each half-hourly trading slot?
Responding, Labour frontbencher Lord Wilson of Sedgefield said: "That is a good question, and the Government keep this under review at all times.
"We find ourselves in very difficult times. Since the fuel crisis in 2022, we have been dealing with a very difficult situation, and this is under review all the time."
Tory shadow energy minister Lord Offord of Garvel welcomed moves to assist vulnerable consumers but said calls for a social tariff "would be a sticking plaster" given power costs were "way too high".
The Conservative frontbencher said: "Our domestic electricity is three times more expensive than that of the US, and industrial electricity is four times more expensive than that of the US and seven times more than that of China. This is the real problem.
"Only one-third of electricity prices in domestic bills are wholesale prices, 46% of the total costs are the green levies and subsidies, which are being accentuated by the accelerated and self-inflicted rush to decarbonise the grid.
"Will the minister go back to his department so that we can come up with a new plan for energy that is affordable for all?"
Lord Wilson said: "We have plans on the go to make everybody’s energy bills cheaper.
"We need to move towards having energy that is essentially homegrown, as at the moment it is not.
"We need to move in that direction if we want to bring down bills, which is the target of this Government."
Former EastEnders actor and non-affiliated peer Lord Cashman urged the scrapping of the standing charge on all public utilities, which he argued was "a punitive tax on those who can least afford it".
Lord Wilson said: "We had a comprehensive review involving Ofgem in December to discuss this issue.
"We know that too much of the burden of the bill is placed on standing charges.
"We are committed to lowering the costs of standing charges and have worked constructively with the regulator, Ofgem, on this issue."
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