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The National (Scotland)
The National (Scotland)
National
Steph Brawn

'Not good enough': Octopus Energy boss slams UK zonal pricing snub

THE boss of Octopus Energy has warned of “soaring” energy costs being “locked in for years to come” amid Ed Miliband reportedly ditching plans to reform the outdated market.

The Energy Security Secretary has allegedly binned plans to introduce zonal pricing, which Octopus Energy has repeatedly claimed could have given Scots some of the cheapest electricity in Europe and boosted the economy

The scheme would have split the UK into regions based on local supply and demand, meaning Scotland would likely have benefitted enormously due to an abundance of renewables.

The UK Government has said it will not comment on reports it has branded as "speculation". 

Greg Jackson, CEO of Octopus Energy, has been a prominent campaigner for introducing zonal pricing, having constantly highlighted how windfarms are often paid not to generate energy because they are built where there is insufficient grid.

On the back of the latest reports, he tweeted: “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.”

Jack Richardson, head of policy at Octopus, accused the UK Government of “capitulating” to lobbying from major generators.

He posted on Twitter/X: “Taking zonal off the table against the advice of NESO [National Energy System Operator], then doing loads of complicated, costly stuff to try to get the benefits of zonal pricing, shows the government knows zonal is the right thing to do but it is capitulating to all the backstage lobbying.”

Octopus Energy has recently launched a "wasted wind" tracker to show the public how much billpayers' money is being spent on turning off windfarms.

Ed Miliband has reportedly abandoned plans to introduce zonal pricingEd Miliband has reportedly abandoned plans to introduce zonal pricing (Image: PA) According to the energy provider, constraint costs have hit almost £700 million already this year.

Rachel Fletcher, director of economics and regulation at Octopus Energy, said: “If the reports are true, it’s deeply concerning that anyone would rule out a detailed and proven plan to reverse the spiralling costs of electricity, without any inkling of what an alternative might look like.

"Zonal pricing would see significantly lower costs by 2028. Any alternative needs to be tested against that."

Despite claims from opponents that zonal pricing would turn the UK energy market into a postcode lottery, analysis showed earlier this year that households in Scotland will already be paying more for electricity in the next year than those living in London.

Consumers in north Wales and Merseyside will pay £120 more than households in London for their electricity over the coming year, Cornwall Insight forecasts, while those in the north of Scotland will pay £96 more than those in the capital.

The differentials stem from variation in the charges levied on bills to fund the upkeep of Britain’s 14 regional electricity distribution networks, which are regulated by Ofgem.

Zonal pricing could have cut the cost of renewing and updating the country’s electricity grid by billions.

A report by FTI Consulting predicted overall savings of £52 billion for consumers over 20 years, while another, which was commissioned by Octopus, found the UK would need to spend £27bn less on major grid upgrades in the future.

Former Alba MP Neale Hanvey said: “Under the ‘broad shoulders of the UK’, Scotland is being robbed of our vast energy wealth while handing exorbitant profits to the big energy companies.

“Our people are paying up to three times as much for energy as they should as Ed Miliband abandons ‘zonal pricing’ plans.”

Former MP Angus MacNeil accused Labour of "short-term thinking" and called for Scotland to be in control of its own energy policy.

He said: “Scotland is a net exporter of electricity, yet energy bills in Scotland are higher than anywhere else in the UK.

“Zonal pricing was a modest, common-sense reform that would have recognised Scotland’s role in powering the UK and brought long-overdue fairness to our bills.

“By caving to pressure from the energy giants and abandoning a policy that would have incentivised clean energy use in the right places, Labour are undermining their own climate agenda. It is short-term thinking at its worst. 

“Scotland deserves better. We deserve control over our own energy policy, one that puts the needs of our communities first, not last. It is clear the only way we can do that is by becoming an independent country.”

When asked for a response, the Department for Energy Security and Net Zero said it does not comment on “speculation”.

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