Ed Miliband confirmed ‘zonal’ energy pricing is on the table today despite fears it will create a ‘postcode lottery’ for bills.
The Net Zero Secretary said he was ‘studying the detail’ amid claims officials have recommended implementing the idea.
While visiting broadcast studios, he emphasized that the proposal, which would determine prices based on the cost of generating power in different areas, would not lead to an increased financial burden on households.
During an interview with Sky News, Mr. Miliband stated, “We are still evaluating the specifics of this plan, which is crucial for us to get right, and we are thoroughly analyzing its impact.
His main objective is to reduce energy bills in a fair manner, ensuring that any reforms made will align with this goal and pass the fairness test.
‘There’s very strong views on both sides of industry, as you’ll probably have gathered on this. People are fighting it out.
Ed Miliband confirmed ‘zonal’ energy pricing is on the table today despite fears it will create a ‘postcode lottery’ for bills
‘We’re going to take this, make a calm and considered decision on this.’
Mr Miliband told BBC Radio 4’s Today programme that he did not want to ‘jack up’ bills in one part of the country.
‘My test of any reform is will it cut bills and will it do it across the country in a fair way. I’m not in favour of a postcode lottery,’ he said.
Under the radical reforms, the UK could be split into several different zones with varying electricity prices between them.
The electricity price would reflect what it costs to produce and supply energy in each region, rather than what is currently a single countrywide price.
It could mean people who live near wind farms or other clean power projects 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.
His company recently 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 say zonal pricing would merely create a ‘postcode lottery’ for energy bills, with those in the south facing sharply increased costs.
Dale Vince, the founder of Ecotricity, has warned the ‘complicated’ reforms would be ‘lengthy and difficult to implement’ and create huge uncertainties for investors.
Some of the UK’s largest trade unions and business groups are also urging the Government to rule out a move to zonal pricing.
They argue it would increase costs for heavy industries like carmaking, ceramics and oil refineries.
The debate has stepped up a gear as Mr Miliband holds an energy security summit in London today,
Keir Starmer has announced £300million funding for domestic offshore wind supply chains as part of a push to secure clean energy investment in the UK.
The funding through publicly owned company Great British Energy, brought forward as an initial investment ahead of the spending review, will be invested in a domestic supply chain for components such as floating platforms and cables for the offshore wind industry.
The PM said the fast-tracked funding would create jobs and strengthen UK security, as he called for international investment in British clean energy.
Sir Keir said: ‘Delivering the plan for change means winning the race for the clean energy jobs of the future, which will drive growth and help us reach clean power by 2030.
‘That is why I am bringing forward much-needed investment in our domestic offshore wind supply chains, strengthening our security and creating good jobs for our welders, electricians, and engineers.
‘Let my message to the world go out: come and build the clean energy future in Britain.’
It is part of a push to encourage developers and investors to invest in clean energy in the UK, which Labour has made a core plank of its growth strategy.
The Government has committed to delivering most of Britain’s energy through green sources by the end of the decade, which will require a huge ramping up of offshore and onshore wind, solar panels and the grid.
It is hoped the announcement of the funding, part of the £8.3billion announced for Great British Energy, will mobilise additional private investment and secure manufacturing facilities for energy supply chain components which are key for the domestic offshore wind industry.
RenewableUK has pointed to research by LCP Delta, commissioned by energy firm SSE, that found households and businesses in England and Wales could lose out under the proposals
Companies will be able to apply for grants if they can show they will produce long term investment in UK supply chains.
The possibility of a zonal model is currently being considered as part of the Review of Electrical Market Arrangements, or REMA.
It could see the UK split into between seven and 12 zones and copy a pricing system used in countries such as Italy, Denmark, Norway and Sweden.
A final decision on REMA is expected around the middle of this year.
