LABOUR energy minister Michael Shanks has admitted Scots would have seen their energy bills cut with zonal pricing, but claimed introducing the scheme wasn’t worth the “trade-off”.
He also argued the “uncertainty” around zonal pricing would have hit Scotland worse than other parts of the UK.
The UK Government shelved plans to introduce the scheme into the energy market this week.
Octopus Energy has repeatedly said the model – which would have split the UK into price regions based on proximity to energy generation – would have given Scots some of the cheapest energy in Europe because of its abundance of renewables.
Shanks admitted there could have been a bill discount for Scots but said it wasn't worth the "trade off".
"If you look purely at one point in time, and look at an analysis of what would have happened to household bills, there would have been a discount in Scotland because we've got a significant amount of renewable energy at the moment,” he told the Daily Record.
"But the other side of that equation is that it would hamper the investment that would be coming in to build that clean power infrastructure in the first place.
"So you've got to have a trade-off here, where there is a theoretical benefit of bill discounts years down the line, but probably an increase in bills in the short term.”
Shanks has claimed charging Scottish electricity users less than those the south of England would have been a "huge risk" to investment north of the border.
“Transitioning to zonal pricing would have led to at least seven years of uncertainty, and that uncertainty would have hit Scotland more than any other part of the UK,” he said.
Rachel Fletcher – the director of regulation at Octopus Energy – told The National earlier this year that she did not buy claims zonal pricing would take seven years to implement, as she said the nodal pricing – a more complicated version of zonal – has been implemented internationally in less than four years.
On investment, she said Sweden had attracted more than €70 billion of industrial investment since making the switch to the zonal model and insisted Scotland could reap similar benefits.
Like Scotland, there is an abundance of renewables in the north of Sweden, where low electricity prices are now enticing industry to move to the region.
Fletcher told The National in October last year: “I think there is a strong case [for zonal pricing] for Scottish customers in terms of more access to low or negative electricity periods, but there’s also massive opportunity to attract industry into Scotland.
“Sweden, for example, has got zonal pricing and it’s got a similar situation where the north has got abundant renewables.
“On the back of the very low electricity prices that are now properly reflected in the zonal market, they’ve attracted over €70bn worth of industrial investment.”
Fletcher added that if zonal pricing was introduced, Scots could at times benefit from “negative” energy prices, where you are effectively paid to use electricity or are getting it free.
Countries such as Australia, Norway, Denmark and Sweden have all implemented zonal pricing and Octopus says the single wholesale price setup is slowly becoming the “exception not the rule”.
