UK drops controversial plan to split its electricity market

Following media reports earlier this week, the UK government has confirmed it has decided it will not split the electricity market into several price zones, ending “a debate that’s rumbled on for years and caused a rift between producers and the nation’s largest residential supplier”, reports Bloomberg. The government says it will reform the existing national pricing system, according to a statement released this morning, the article notes.

The government had been considering a proposal for zonal pricing that would see different areas of the country pay different rates for their electricity, depending on local supply and demand, reports the Press Association. The plan, part of a package of potential reforms to the electricity market that have been being considered for several years, would have resulted in the south of England paying more for electricity than Scotland, reports the Financial Times.

The government says it will now retain a single national wholesale price as it is the “right way to deliver a fair, affordable, secure and efficient electricity system”, the article notes. Reuters reports that, alongside the decision not to pursue zonal pricing, the government has announced that it will seek to spread out the building of new energy projects around the country, giving investors more confidence on where and when to build projects and speed up grid connections.

The net-zero-sceptic Daily Express reports that the energy secretary Ed Miliband has performed a “u-turn” by abandoning the “highly controversial zonal pricing” policy “hated by Brits”. It adds that this marks the “latest humiliation” for Miliband. (The consultation on proposed changes to the power sector, including zonal pricing, was launched in 2022 under a former Conservative government.)

The announcement follows days of speculation, with the Guardian, BusinessGreen and Financial Times and other publications reporting on it over the recent days.  

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