WATCH: Ed Miliband says cutting Scotland’s energy costs ‘unfair’ to Midlands and South of England as Labour does not want to risk their ‘competitiveness’
Labour’s energy secretary 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.
Speaking in the Commons, he said zonal pricing failed the “fairness test” as “people and businesses could find themselves disadvantaged through no fault of their own and many would see it as unfair.”
“Such a so-called postcode lottery is in my view difficult to defend… so firms in higher priced zones such as the Midlands, Wales and the South of England would therefore face damage to their competitiveness.”
The move could have a significant impact on next year’s Holyrood election by over-charging Highland residents for electricity that is generated in the region has become a lightning rod for dissatisfaction.
It means that one of the only clear promises made by Labour during the general election remains, so far as the Highlands is concerned, completely unfulfilled and not likely to be kept before May 2026.
Highland MPs says voters will be ‘dismayed’
Inverness, Skye and West Ross-shire MP Angus MacDonald who has been campaigning for fair community benefit from renewables said: “People in the Highlands are doing more than their fair share to power the UK.
“These communities should not be left with some of the highest energy bills in Britain. I understand that zonal pricing has raised real concerns about investment. But if the government is ruling this out, then what is the alternative?
“We need a serious plan to bring bills down for people in the Highlands — genuine community benefits enshrined in law, community ownership and a serious review of the coupling of gas and electricity bills.”
Moray West, Nairn and Strathspey MP Graham Leadbitter, the SNP’s Westminster Energy spokesperson, said: "People will be dismayed that an option that could have delivered more affordability has been cast aside by a UK government which has overseen their bills rise drastically.
"Local people bear witness every day to the production of an abundance of clean energy, and yet in their own homes pay some of the highest energy bills in the world. That's not fair, and the UK government's response to that has not been good enough.
He asked: “How are they going to meet their election promise to reduce bills by £300?"
Response from energy companies
Most energy companies were against the plan but Octopus energy boss Greg Jackson was the exception and he slammed the decision by Mr Miliband as locking “Soaring costs, locked in for years to come, and more on the way.”
He said: “Britain's broken energy system. Companies built windfarms where there's no grid and you pay them to not generate. Soaring costs, locked in for years to come, and more on the way.
“It's not good enough to sigh. Something must change. It's brutal for families and crippling for growth.”
On the other hand the chief executive designate of SSE plc, Martin Pibworth, backed Mr Miliband talking-up the impact on “markets” and “rising bills” – the type Highlanders are all too familiar with.
“Zonal pricing would have added risk at a time when the UK needed to accelerate its clean power transition, making energy bills more expensive,” he said.
“This decision reaffirms the UK as a world-leading renewables market, enabling the efficient delivery of the homegrown energy the country needs.”
Midlands, Wales and the South of England would ‘face damage to their competitiveness’
Mr Miliband told Westminster: “Under reformed national pricing there would be one national wholesale price as now. Under zonal pricing there will be different wholesale pricing in different zones.
“With lower prices tending to occur in zones with more renewable energy and a smaller population and higher prices in those places with less power and more people.
“The challenge will be obvious to the House, people and businesses could find themselves disadvantaged through no fault of their own and many would see it as unfair.
“Such a so-called postcode lottery is in my view difficult to defend… so firms in higher priced zones such as the Midlands, Wales and the South of England would therefore face damage to their competitiveness.”