Energy giants have questions to answer over zonal pricing

The Herald Scotland

a day ago

For the Highlands, the proposal ticked boxes. In a region with a colder climate, in which an estimated 33% of households in Highland experience fuel poverty, and have higher costs of living and lower incomes, the possibility of lower energy bills was attractive. Especially given that costs for those in the Highlands and Islands are higher, because of greater dependence on electricity and heating oil than mains gas.
Even the unstinting efforts of Changeworks, Home Energy Scotland, the Energy Saving Trust and other advice services can only partially mitigate the difficulties faced by many.
But now Energy and Climate Change Minister Ed Miliband has rejected Zonal Pricing, asserting that 'a fair, secure, affordable and efficient electricity system' can only be achieved through a reformed pricing system.
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The way to escape from dependence on 'fossil fuel markets controlled by dictators' is through a single national (UK) wholesale price. The dreaded 'Postcode Lottery' had to be avoided. And there was no guarantee Zonal Pricing would bring lower bills for anyone.
Scottish Secretary Ian Murray praised the decision, citing a 'predictable climate for investment'. Consumers will, he insisted, 'feel the benefit of Labour's clean energy mission.'
Bigger energy players agreed: Centrica have called it 'common-sense' and SSE's Martin Pibworth has said zonal pricing would have slowed the clean power transition, 'making energy bills more expensive.'
The Inverness Courier responded with alacrity and condemnation: 'Labour's Ed Miliband has ruled out zonal pricing that could have cut Scotland's soaring energy bills because it would be 'unfair' to areas like the Midlands and South of England that consume the most power … the move could have a significant impact on next year's Holyrood election … over-charging Highland residents for electricity that is generated in the region.'
Ed Miliband has come under fire over the decision. (Image: Newsquest) It's also worth noting that the SNP has carefully avoided backing zonal pricing – Kate Forbes and John Swinney, while predictably critical of Miliband, have steered clear, after the mess they made of Scotwind leases for offshore wind rights, underselling by, some say, £60 billion. While co-operation between UK and Scottish Governments is essential, criticism of Ed Miliband's statement is hypocrisy.
All the same, UK Labour will need a good wind in its sails if it wishes to persuade voters with its reformed national pricing regime, changes to transmission charging and more planned infrastructure development. For starters, it must reassure the thousands already unconvinced by the bitter contrast between talk of a 'just transition' and the 150-metre-plus wind turbines marching implacably through their glen, trailing substations behind.
Except these are not Labour Government developments. Among Mrs Thatcher's many gifts to us was a Wild West Energy marketplace, and the very corpulent corporations currently invading rural Scotland are not bringing power to the glens for the nation, like Tom Johnston, but seeking profit with a greenwashed prospectus.
And the UK Government is not the major player here, its partnership with Big Energy looking a bit uneven.
Ed Miliband's department is promising eligible households within 500 metres of electricity transmission infrastructure discounts on their bills, with further compensation to come.
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Will this be enough? I want to see UK Labour deliver its proposals for 'a transformative Community Energy programme' – community-led renewables and a 20% community share of large-scale projects. I want an end to Constraint payments adding to consumers' bills, when the Grid infrastructure isn't up to the job and turbine sails move uselessly around like Tories canvassing at elections.
The challenges of rural living remain, and must be addressed. One of the most authoritative studies is the 2023 report by the Royal Society of Edinburgh, The cost of living: impact on rural communities in Scotland. And the Scottish Human Rights Commission's 2024 report on life in the Highlands and Islands stands in stark judgement on all levels of government. Energy costs loom large in these important documents.
But the biggest questions should be asked of those corporate giants of Scottish energy, whose lobbying is ever on behalf of shareholders and profits. Their campaigning and threatening have worked so far, but their cynicism, seeing communities as anonymous cattle to be milked, must now be lessened by more realistic community shares.
Zonal pricing, Big Energy claimed, risked hindering investment, diverting time and resources, bringing volatility, market instability and probably plagues of frogs. Well, SSEN (profits £2.4bn.) E-ON (£3bn) EDF (£8.5bn) and Scottish Power (£1.2bn) now have to walk the walk, and deliver on their promises to help consumers and build an age of clean power.
Michael Gregson is a Labour councillor for Inverness Central