Energy / Zonal energy pricing scrapped by UK Government in ‘disappointing outcome’
PLANS to introduce zonal energy pricing, which could have resulted in cheaper bills for places with higher electricity supply, have been abandoned by the UK Government.
The initiative would have seen people in areas housing large-scale energy projects, such as the Viking Energy wind farm, charged less for their electricity.
Users would have been charged different rates depending on their local supply, and demand.
With Shetland playing host to the 103-turbine wind farm already, and with a number of future energy projects on the horizon, there had been hopes that zonal pricing could drive down the high rates of fuel poverty in the isles.
But the UK Government said on Thursday that, after a three year consultation period, it had decided not to pursue zonal energy pricing.
Instead it said it would retain a single national wholesale price while “reforming the system”, adding this was “the right way to deliver a fair, affordable, secure, and efficient electricity system”.
Shetland Islands Council leader Emma Macdonald, who has previously called for a ‘Shetland tariff’ to ensure cheaper energy prices for islanders, said this was a “disappointing outcome”.
She said the UK Government needs to “understand the impact on communities like ours”.
“They say ‘that the government puts fairness and affordability at the centre of the electricity market reform to deliver a system that puts working people first’,” the council leader said.
“It is extremely clear that they have not considered the fact that we are generating energy here in Shetland, yet people here cannot afford to turn on their heating to heat their homes.
“Host communities need to see a meaningful benefit and one that is fair.
“As a council we have made this case for a number of years and it is clear that we need to continue to do so”.
Macdonald said that an electricity bill in Shetland could cost double that of one on the UK mainland, and it was up to the UK Government to find solutions to this.
“Whilst this is a disappointing outcome it is still important that we continue to engage and make the case for host communities to be recognised and for them to benefit in a meaningful way,” she added.
The energy sector has been divided by plans for zonal pricing, with Ofgem chief executive Jonathan Brearley saying there were “clear benefits” to the idea.
Octopus Energy chief executive Greg Jackson was also a vocal supporter, saying that zonal pricing would help tackle billions of pounds of wasted energy in the system.
Speaking on social media yesterday (Thursday), Jackson said there was a “real risk” that waste would continue to spiral if large energy developments continue to be built without anywhere for the energy to go.
He added that the company disagreed with the government decision.
However SSE has been critical of the plan, and said yesterday that the “overwhelming majority” of industry stakeholders agreed with them.
It said zonal pricing would have added “unnecessary complexity and risk into the UK energy market at a time when the country needs greater investment in clean power”.
The company added the change would have had a “detrimental effect on the prices consumers pay for their energy”.
A strategic spatial energy plan is set to be published next year by the National Energy System Operator (NESO), which the UK Government says will improve efficiency in the electricity system.
Energy secretary Ed Miliband said that building clean power “at pace and scale” was the only way to “get Britain off the rollercoaster of fossil fuel markets”.
“As we embark on this new era of clean electricity, a reformed system of national pricing is the best way to deliver an electricity system that is fairer, more affordable, and more secure, at less risk to vital investment in clean energy than other alternatives,” he said.
“Our package of reforms will protect consumers and secure investment as we drive to deliver our clean power mission through our Plan for Change.”
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