Octopus Energy has hit out at the government’s decision to abandon plans for zonal electricity pricing, warning that without a viable alternative, households face higher energy bills and unnecessary infrastructure costs.
The government confirmed this week it would ditch the controversial scheme – which would have seen different power prices in different parts of the UK – in favour of an as-yet undefined system dubbed “Reformed National Pricing”.
Octopus says this is little more than a label, with no detail, models or analysis behind it.
The company had been one of the loudest voices in support of zonal pricing, arguing it could slash electricity bills by between £3.7 billion and £5 billion a year and help avoid the need for nearly 3,000km of expensive new grid infrastructure.
It pointed to modelling by FTI and system operator forecasts that show constraint payments – the cost of turning off wind farms and firing up gas plants due to grid bottlenecks – have already hit nearly £700 million this year and are set to balloon to £8 billion annually by 2030.
Octopus insists zonal pricing is a tried and tested model used across most of the OECD and could be rolled out in the UK by 2028 – or even sooner, noting that Sweden implemented a similar system in just 15 months.
But with ministers now backing away, the firm is demanding the government and industry come up with a credible alternative fast.
Greg Jackson, CEO and founder of Octopus Energy, didn’t mince his words: “Electricity bills are spiralling and zonal pricing would have reversed that. The government and generators need to come up with an alternative which will prevent the now seemingly inevitable price rises that will hit over the next few years.”
Octopus mourns zonal pricing death appeared first on Energy Live News.