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Ed Miliband has confirmed the government is looking at plans to charge homes in the South more for electricity after critics dubbed the plans a “postcode lottery”.
The ‘zonal pricing’ system would mean different regions are charged different rates for energy, with prices being determined by supply and demand in each area. With Scotland benefitting from greater wind supplies, its likely that homes in the South could face higher bills as a result of the scheme.
The energy secretary said ministers will “make a calm and considered decision” on the issue, arguing the government’s main priority is to “cut bills” in a “way that’s fair”.
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But the plans have been dubbed “madness” by Labour donor and eco-tycoon Dale Vince, who warned it would create “complexity, delays and unfairness”.
Asked about the reports, the energy secretary told Sky News: “This is a very complicated issue that you’re referring to that my department is looking at around so called ‘zonal pricing’.
“Look, I’ll be honest with you, we’re still looking at the details of this, which is something we’ve got to really, really get right, and we’re studying in detail the effects.
“Look, my bottom line here is we want to cut bills, and we want to do so in a way that’s fair, and we want to make sure that happens, and that’s my test for any reforms that we make.
“There’s very strong views on both sides of industry, because you’ll probably have gathered on this. People are fighting it out. We’re going to take this, make a calm and considered decision on this.”
He later added he is “not in favour of a postcode lottery on bills”, saying his “test for any reform is will it cut bills and will it do it across the country in a fair way”.
Mr Miliband added: “What I do not want to do is somehow jack up bills in one part of the country in favour of another”.
But Mr Vince, founder of clean energy company Ecotricity, warned zonal pricing would create a “postcode lottery”, telling The Independent: “Tens of millions of Britons 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.
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“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.
“Then there’s the idea that businesses will relocate to where most of the renewable energy is, like the north of Scotland, because they can get cheaper energy there. I mean the chances of it happening are slim, and then there’s the timeframe within which it would happen – we don’t have that much time.”
He added: “I think this plan has been written up in a windowless room with no connection to the real world.
“If the government is serious about lowering energy bills, we have far more sensible and effective options – chief among them ‘breaking the link’ between the price of gas and the price of all our electricity.”
RenewablesUK is also urging the government to rule out introducing zonal pricing, saying it could be incredibly disruptive to investment.
“The government has a golden opportunity to secure a record amount of new wind and solar farms in this year’s auction for new projects, but we can only achieve this if we get the right framework in place to attract billions in private investment,” said chief executive Jane Cooper.
