Ed Miliband Faces Setback as Government Quietly Shelves Divisive ‘Zonal Pricing’ Energy Policy

Published: 10th June 2025. The English Chronicle Desk

In a significant political reversal, the Government has quietly dropped its proposal to implement ‘zonal pricing’ for electricity — a controversial energy reform once championed by Energy Secretary Ed Miliband and widely opposed by the British public. The decision marks a fresh embarrassment for Miliband and a notable shift in Labour’s energy policy direction, coming amid mounting pressure from industry leaders, public polls, and concerns among senior officials about investor confidence.

The now-shelved policy would have fragmented the UK’s single electricity market into multiple regional zones, assigning prices based on local supply and demand. While Scotland, with its rich wind energy generation, stood to benefit from lower electricity costs, consumers in southern England could have faced significantly higher bills due to the region’s greater dependence on fossil fuels during peak demand periods. The concept, although praised by some energy analysts as a way to incentivise more efficient energy usage and grid balancing, was increasingly condemned by critics and dubbed a “postcode lottery” for energy prices.

According to sources close to the Cabinet, the policy had long been under internal review, and the final decision to abandon it followed months of deliberation. Government officials reportedly concluded that the risks posed to the broader clean energy strategy outweighed any potential long-term gains from zonal pricing. A senior source speaking to The Guardian revealed that the proposal had become increasingly unworkable when considered alongside the imminent upgrades to the national grid, the urgency of forthcoming renewable energy auctions, and growing international investor caution regarding the UK’s energy policies.

“The government has been weighing this up carefully,” the source stated, “and concluded that the benefits of delivering the clean power mission at pace, particularly given the expected impact of imminent grid upgrades… would outweigh the purported benefits of zonal pricing — which at any rate would take beyond the next election to implement.”

The policy itself was originally floated under the Conservative government as a way to redistribute energy demand more evenly across the UK. By encouraging heavy users to relocate to areas with surplus generation, such as Scotland, it was hoped that wasted wind energy — sometimes curtailed due to a lack of local demand — could be better utilised. Industry figures such as Octopus Energy CEO Greg Jackson were vocal supporters of the initiative. Jackson argued that by making more use of wind power, particularly on high-generation days, zonal pricing would ultimately drive bills down for everyone.

However, that optimism was not universally shared. Major suppliers including Scottish Power and SSE issued warnings that regional energy pricing could increase disparities in household bills and disincentivise renewable energy investment in less advantaged areas. More broadly, many industry experts and climate policy advocates expressed concern that the plan failed to address the core structural issue within the UK’s energy system: the fact that household electricity bills remain tied to the fluctuating price of natural gas, regardless of the energy source used.

Public opinion also leaned heavily against the proposal. A poll conducted by RenewableUK revealed that 58% of respondents opposed the move, with many citing fairness and regional inequality as key concerns.

While the official announcement is yet to be made public, insiders have confirmed that the policy has been effectively shelved, with Cabinet approval of the decision expected shortly. The retreat signals not only a policy correction but also a political blow for Ed Miliband, who has been a central figure in Labour’s energy and climate agenda. With the party now focusing on accelerating clean energy initiatives without introducing regionally variable pricing, questions are already surfacing about whether Miliband retains the authority to steer the Government’s increasingly complex energy transition.

This latest development reflects a broader recalibration within Labour as it attempts to navigate the intersecting demands of climate ambition, affordability, and political pragmatism. For now, households across the country can breathe a sigh of relief that electricity prices — at least for the foreseeable future — will not be determined by their postcode.