Energy Secretary Ed Miliband has confirmed the government is exploring a major shake-up in how electricity is priced in the UK. One of the options on the table is regional pricing, also known as zonal pricing—a move that could impact bills for millions of households.
What Is Zonal Pricing?
Right now, most people in the UK pay roughly the same rate for electricity, no matter where they live. Zonal pricing would change that.
Instead, the cost of electricity would depend on where you live and how much power is generated locally. For example, areas like Scotland, which produce a lot of wind energy, could see lower bills. Households in parts of southern England, which rely more on imported electricity, might pay more.
Other countries like Australia, Italy, and Sweden already use this type of pricing.
If introduced, this would be the biggest change to the UK’s energy market since privatisation in the 1990s.
What’s the Government Saying?
A recent Daily Telegraph article claimed the government was “poised” to roll out zonal pricing. But Ed Miliband quickly pushed back, calling the story “nonsense.” He said he won’t back any plan that creates a “postcode lottery” for energy bills.
Still, he confirmed that the government is looking at both zonal pricing and national pricing reforms.
“There are two options,” Miliband said. “Whatever route we go down, my bottom line is bills have got to fall—and they should fall throughout the country.”
He also said the issue is complex and will take time to fully review.
Industry Reaction: Mixed Views
Some in the energy sector support the idea. Greg Jackson, CEO of Octopus Energy, believes zonal pricing could make the system more efficient. It might also reduce the need for expensive upgrades to the electricity grid.
But others strongly disagree. Dale Vince, founder of Ecotricity and a Labour Party donor, called zonal pricing a “terrible idea”. He warned that millions of people could end up paying more.
Why Is This Being Considered Now?
The UK now generates more electricity from renewables than ever before. But many households are asking:
“If we’re producing more clean energy, why aren’t our bills going down?”
The government wants a system that reflects the real cost of delivering electricity and helps people benefit from the shift to renewable energy.
What Happens Next?
No final decision has been made. The government will keep consulting with industry leaders, energy providers, and consumer groups. If any changes go ahead, they’ll be rolled out carefully and gradually.
Miliband made one thing clear:
“This is about delivering lower bills—for everyone.”
Want to Cut Your Bills Now?
At Energy Advice Helpline, we help households across the UK access free home upgrades through the ECO4 scheme. You could qualify for home insulation, solar panels, and an air source heat pump.
All fully funded if you’re eligible! To apply in just 30 seconds, simply answer the questions below.
