Ed Miliband plots new electricity plan which will see certain households pay mor

Ed Miliband is poised to back plans to charge homes in the South more for electricity than those in Scotland or in the North. The Energy Secretary is weighing up whether to introduce zonal pricing which critics have slammed as a ‘postcode lottery’ system. 

The move would effectively 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 thanks to being the home of more wind generation. However, prices in the south of the country would soar. Supporters say the change could reduce household electricity bills overall by reducing the necessity for grid upgrades.  

Mr Miliband has been advised by government officials to move forward with the changes, the Telegraph reported.

The Energy Secretary is expected to make his recommendation to cabinet colleagues within the coming weeks, a final decision is likely to be announced by mid-2025.

Ministers say they are considering the policy. Responding to a question from an MP, Energy Minister Michael Shanks said: “The Government is considering reforms to the electricity market through our Review of Electricity Market Arrangements (REMA).

“This includes consideration of whether to move to a zonal electricity market, where prices vary depending on local conditions, or to continue with a reformed version of our national pricing arrangements.”

Households and businesses in England and Wales are braced to be hit the hardest, according to research by energy provider SSE.

Scottish Power and SSE warn 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.

Fairer Energy Future campaign, which includes firms investing in renewable energy as well as trade bodies, has written to Chancellor Rachel Reeves warning the policy would be a disaster.

The letter highlighted research from the UK Energy Research Centre which found zonal pricing “could increase consumer costs by up to £3 billion annually”. Only 14% of those surveyed were supportive of the system.

However, Octopus Energy, the UK’s biggest household energy supplier, believes the pricing system could help consumers save money.

Ovo Energy and Citizens Advice also support the scheme and say that the zonal pricing could see households across the money save money.