A system that would see different parts of the UK paying different prices for electricity has been formally ruled out.
Under zonal pricing, the UK energy market would have been divided into different zones, with prices being set according to supply and demand within them. Its supporters argue that it would attract energy-intensive industries to regions with cheap, renewable energy generation, potentially reducing the need to transmit energy long distances. It could also potentially reduce objections to renewable developments with the promise of lower energy prices. The prospect has bitterly divided the UK energy industry, however, with opponents claiming it would deter investment and raise costs.
Despite its chief executive, Jonathan Brearley, previously endorsing zonal pricing, Ofgem welcomed the certainty that the decision brought for the energy system’s future. It added that it and the government would work together:
“…to build a decarbonised system which will bring stability and protect consumers from international volatility and the rollercoaster effect that has on bills. We’ll be setting out our thinking on network charging reforms shortly.”
Energy companies SSE and Centrica also welcomed the decision. In contrast, Greg Jackson, the boss of Octopus Energy and a vocal proponent of zonal pricing, criticised the decision. He argued that there were no proven alternatives to zonal pricing.
If you have gas central heating, you are less affected by changes in electricity prices, but ensuring efficiency is still important for reducing energy bills. Get in touch with Xgas to arrange a boiler service in Chester or set up a care plan.