Miliband drops plans to charge homes in the South more for power
The Energy Secretary has reportedly sided with opponents of proposals for so-called zonal pricing, following warnings it would imperil his clean power targets.
Under the changes, regions would have paid different prices for electricity based on local supply and demand – meaning areas with more wind farms such as the North and Scotland would have paid comparatively less than the South at peak times.
Advocates claimed it would also have cut bills for all households overall by removing the need for £27bn of grid upgrades and axing the payments made to wind farms to switch off when the network is busy.
But wind farm owners including SSE, RWE and Scottish Power had warned that pushing ahead with the policy would have created huge uncertainty about their revenues and gummed up investment at a critical time for the Government.
This risked derailing Mr Miliband's plan for a massive building programme to deliver Labour's pledge that the grid will operate on 95pc clean power by 2030.
A government source said ministers had weighed up the arguments and concluded that the risks of the policy 'outweigh the purported benefits', according to the Guardian. They also said the changes would take years to implement.
The mooted decision comes as the Government prepares to launch its latest renewable energy subsidy auction, known as AR7, in early August.
Industry executives have repeatedly warned ministers that clarity was needed ahead of the auction.
On Wednesday, a spokesman for the Department for Energy Security and Net Zero refused to comment on 'speculation' but did not explicitly deny the claims.
However, a source familiar with the discussions confirmed that a decision had effectively been made and was now going through the Government's final sign-off process.
The report triggered an immediate backlash from advocates of zonal pricing, including Octopus Energy and the Britain Remade campaign, who have warned that spiralling constraint payments to wind farms threaten to push up bills and undermine support for net zero.
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