Miliband urged to save net zero through higher bills in the South

Telegraph

04-06-2025

Ed Miliband must ramp up energy bills across London and southern England to hit net zero targets, a parliamentary committee has said.
The Energy Secretary is likely to miss his target of making the electricity grid 95pc carbon free by the end of the decade unless he embraces so-called zonal pricing, a new report from the Lords industry committee warned.
Such a change would mean splitting Britain's single electricity market into almost a dozen regions, with the price of power determined by supply and demand within each area rather than set nationally.
In practice, prices would surge in London, southern England and the Midlands where renewables are in short supply, but plummet in Scotland because of its plentiful wind farms.
The change would therefore be hugely controversial. However, it would encourage companies to build renewable power infrastructure nearer to where prices are high, cutting down the amount of new pylons, cables and transformers needed to achieve a decarbonised grid.
'Regional zonal pricing should enable better use of existing grid capacity and lower the cost of electricity, provided that the transition and its risks are managed well,' the report said.
Even with such changes, Mr Miliband's clean power by 2030 pledge looks increasingly likely to fail, the Lords warned.
Baroness Taylor of Bolton, the committee's chairman, said: 'Given the scale of changes needed to the planning, regulation and delivery of energy infrastructure, and the UK's historic [poor] record of delivering major infrastructure projects, our report questions the feasibility of meeting the clean power target.
'Time is already running out, and there is no room for complacency. The Government and the sector must ramp up their efforts to have a chance of success.'
Zonal pricing has been under consideration in the review of electricity market arrangements initiated by the previous government three years ago. An announcement is now imminent.
Government officials have advised Mr Miliband to press ahead with the policy, but the Department for Energy Security and Net Zero (Desnz) has refused to say if he favours the idea. Mr Miliband has insisted he will not make any change that leads to higher bills for people.
Regardless, the machinery for zonal pricing is already being put in place.
Ofgem recently announced plans for 11 'Regional Energy Strategy Boards'. Nine would be in England with one each in Scotland and Wales, all overseen by the National Energy System Operator (Neso).
The boards would be similar to the municipal electricity and gas boards that oversaw energy supplies before privatisation, comprising local councillors and energy company representatives.
Julian Leslie, Neso's chief engineer and director of strategic energy planning, said the boards would 'ensure that local communities play a central role in planning how they decarbonise and how their contributions support national strategic energy planning'.
Sam Richards, of Britain Remade, a pro-growth campaign group, said the UK needed a 'clean energy revolution to lower bills and create high-quality jobs'.
He added: 'Moving to zonal pricing is a crucial step in achieving this ... It would help make smarter use of our existing grid, bring down electricity costs and attract the investment needed to build clean energy where it's most abundant.'
A Desnz spokesman said: 'We need new infrastructure to protect family and national finances with energy security, through clean home-grown power we control.'
The three years of discussions around zonal pricing have generated growing tensions in the UK energy industry.
John Pettigrew, the National Grid chief executive, last month spoke out against it, warning the disruption would be a huge distraction. Hitachi, suppliers of half the transformers, inverters and switch gear vital to the UK's 'great grid upgrade', have issued similar warnings. Others are strongly in favour, including Greg Jackson, the Octopus Energy boss.