Ed Miliband is set to approve changes under which households in the South would pay more for electricity than those in Scotland and the North. The Telegraph has the story.
The Energy Secretary has been weighing up whether to push ahead with zonal pricing, which would split the country’s single national power market into different regions.
Supporters say the change will cut household electricity bills overall by reducing the need for grid upgrades, while opponents counter that it will create a “postcode lottery” and deter investment in wind and solar farms.
But in a blow to critics, the Telegraph has been told that Government officials have advised Mr Miliband to press ahead with the policy.
Whitehall sources did not deny the claim, but stressed that no final decision had been made. One said Mr Miliband continued to debate the policy with his inner circle.
It could also still be blocked or watered down in later stages when other Government departments are consulted. Ministers have promised to announce a decision by mid-2025.
Switching to regional power pricing would be the biggest shake-up of the electricity market since privatisation in the 1990s.
It would result in power prices being determined by supply and demand in each zone. In practice, this is likely to mean that Scotland and other parts of the UK where there is abundant wind generation would pay less for electricity than households in South.
The proposal has pitted major energy industry players against one another and triggered intense debate about whether it will lower consumer bills.
Wind farm owners SSE and Scottish Power have claimed that the changes would create regional disparities in household bills, while spooking potential investors in renewable energy projects.
That risks slowing down the deployment of wind and solar farms in the coming years – potentially endangering Mr Miliband’s mission to deliver a ‘clean’ power system by 2030 – or making them more expensive as developers demand higher subsidy payments.
However, supporters such as Octopus Energy, Ovo Energy and Citizens Advice, as well as government quangos including the National Energy System Operator and the boss of regulator Ofgem, have argued that a zonal system would reduce costs for all households overall.
It would do this by making the system more efficient, for example ending “constraint” payments to wind farms – where they are paid to switch off – and reducing the need to spend money on new infrastructure that is ultimately funded through levies on consumer bills.
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