Ed Miliband has done a U-turn and has reportedly abandoned the highly controversial ‘zonal pricing’.
Ed Miliband has abandoned the highly controversial ‘zonal pricing’ (Image: Getty)
The Government has abandoned the highly controversial ‘zonal pricing’ power pricing policy which would have seen homes in the South pay more for electricity than those in Scotland or in the North. The radical reforms once considered by that Energy Secretary would effectively have split the UK’s single national power market into different regions based on supply and demand levels in the local area with Scotland likely to pay some of the lowest prices in the UK. But now it appears Labour has abandoned the move in the latest humiliation for Ed Miliband.
Scotland would likely pay some of the lowest prices in the UK thanks to being the home of more wind generation. However, prices in the south of the country would soar as peak power demand requires far more fossil fuels to be used. Slammed by critics as a ‘postcode lottery’ system it appears the Government has decided to not proceed after senior officials warned it could put off investors and make it more difficult to build renewables.
The ‘postcode lottery system’ would split the UK’s single national power market into different regio (Image: Getty)
Sources told the Guardian that the decision will be announced once it has been signed off by the cabinet.
One source said: “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.”
The plan was first proposed by the Conservatives as a way to encourage heavy electricity users to relocate to areas where there is more generation, such as Scotland, and windfarms sometimes have to switch off because of a lack of demand.
Those who lived in a zone with more renewable power generation would pay less (Image: Getty)
Greg Jackson, the boss of Octopus Energy, heavily backed the plans who insisted it would lower bills for everyone since more wind power could be used. On particularly windy days suppliers are sometimes paid to switch wind generation off.
But critics say the plan does not solve the underlying problem which plagues the UK’s grid, that household prices are tied to those of expensive natural gas.
Scottish Power and SSE warned that the system may create “regional disparities” in household bills and deter potential renewable energy investors, according to SSE and Scottish Power. A poll by RenewableUK also found 58% were against the move.
