Ed Miliband has shelved a controversial plan to make people in southern England pay more for their electricity than Scots.
The Energy and Net Zero Secretary had been examining the idea of ‘zonal pricing’, which would reflect what it costs to produce and supply energy in each region, rather than what is currently a single countrywide price.
It would have meant people living near wind farms or other clean power projects – most common in upland rural areas – paying less for electricity than those living in other parts of Britain.
Supporters of a move to zonal pricing, such as Octopus Energy boss Greg Jackson, claim it could bring down bills overall, saving households billions of pounds on their energy bills.
It could also be used to entice energy-hungry tech firms away from the South towards Scotland and the North
But critics had warned it could create a ‘postcode lottery’ for homeowners and lead to a fragmented system.
The Guardian reported that Mr Miliband had decided not to go ahead with the scheme – first suggested by the Conservatives – after receiving warnings that it could put off investors and make it harder to build wind farms.
‘The government has been weighing this up carefully and concluded that the benefits of delivering the clean power mission at pace, particularly given the expected impact of imminent grid upgrades; the need to deliver on the coming renewables auctions; and the significant risk premium being attributed to the UK by international investors, would outweigh the purported benefits of zonal pricing – which at any rate would take beyond the next election to implement,’ a source told the paper.
The Energy and Net Zero Secretary had been examining the idea of ‘zonal pricing’, which would reflect what it costs to produce and supply energy in each region, rather than what is currently a single countrywide price.
But critics had warned it could create a ‘postcode lottery’ for homeowners.
However, Mr Miliband was criticised by campaigners who argued that not going ahead would raise bills for everyone in the long run.
Sam Richards, chief executive of the Britain Remade campaign, tweeted: ‘If reports are true this will lock *everyone* – not just Scotland – into higher bills for years as we will spend billions switching off wind farms when it’s windy (rather than allowing them to sell power dirt cheap locally). A mistake.’
Mr Jackson’s company commissioned research that found Britons could save between £55-74billion by 2050 on electricity bills if the Government adopts zonal pricing.
It is also claimed zonal pricing is a more efficient system and could address regional inequalities in the UK by boosting investment in areas where there is cheaper energy.
Tech giants are putting pressure on ministers to encourage an AI data centre boom in remote areas of Britian by offering some of the cheapest electricity prices in Europe.
But opponents said zonal pricing would merely create a ‘postcode lottery’ for energy bills, with those in the south facing sharply increased costs.
In April Ecotricity founder Dale Vince said: ‘Tens of millions could end up paying more for their energy than they do now. It makes no sense when Labour’s mission is about cutting bills for all rather than a few.
‘Zonal pricing is being presented as a solution but it’s madness. Fragmenting our energy market into 12 different regions would create complexity, delays and unfairness.’
Today he tweeted: ‘Zonal is toast.’
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