Miliband Scraps Controversial Regional Electricity Pricing Plan in Major Policy Reversal

Energy Secretary Ed Miliband has abandoned controversial plans to implement differential electricity pricing across Britain, marking a significant shift in energy policy. The proposed ‘zonal pricing’ scheme, which would have created lower rates in areas with excess supply, particularly Scotland, has been shelved following intense industry pushback and investment concerns.

The decision comes after senior government officials raised red flags about potential deterrents to international investors and complications in renewable energy development. The scheme, initially championed by the Conservative government and strongly supported by Octopus Energy’s founder Greg Jackson, faced substantial opposition from major energy providers including SSE, Scottish Power and RWE.

Industry analysis had suggested the zonal pricing strategy could have delivered substantial consumer savings, with FTI Consulting projecting £52 billion in reduced costs over two decades. Octopus-commissioned research indicated potential infrastructure savings of £27 billion through reduced grid upgrade requirements.

Opposition to the scheme centred on concerns about creating a “postcode lottery” for consumers, with some households potentially facing £200-£300 higher annual bills based solely on their location. SSE’s outgoing chief executive, Alistair Phillips-Davies, had publicly denounced the proposal as a “huge mistake.”

The Labour government’s retreat from the policy follows direct intervention from Prime Minister Keir Starmer’s office, where advisers expressed concerns about potential consumer price increases and the impact on international investment. The timing is particularly sensitive as the government seeks to attract foreign capital for its ambitious energy infrastructure programmes.

The government is now exploring alternative strategies to encourage business relocation to electricity-rich regions, including incentives for battery storage companies to establish operations in Scotland and enhance capacity during peak wind generation periods. The formal announcement is expected ahead of the August renewables auction.