Sir Keir Starmer has stepped in to review controversial government plans that could lead to higher electricity bills for households and businesses in the South of England. The move comes amid increasing concern over the impact of zonal electricity pricing and fears of a voter revolt.

The proposal, being considered by Energy Secretary Ed Miliband, would replace the current system of a single national electricity price with zonal pricing. Under the new approach, Britain would be divided into regions, with electricity costs based on local supply and demand. This could mean significantly higher energy bills for the South, including London, where energy is often imported from elsewhere.

The goal of zonal pricing is to encourage more efficient energy use by lowering electricity costs in areas close to wind farms, such as Scotland and Northern England. Supporters claim it would save consumers £52 billion over two decades and reduce the need for expensive power grid upgrades by £27 billion, cutting down on nearly 2,000 miles of cable.

However, critics argue the changes would shift costs unfairly to the South and create instability in the energy market. Energy companies have warned that the shake-up could scare off investment and delay renewable power projects, which are critical to the UK's clean energy goals.

The Prime Minister’s office has now become directly involved, requesting a fresh review of the costs and benefits. This heightened scrutiny from Downing Street suggests growing political unease over the plan, especially with Nigel Farage’s Reform UK party turning high energy bills and net-zero policies into a core election issue.

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Starmer's intervention is seen as a sign of internal tensions within Labour. While Miliband’s team appears supportive of zonal pricing, the energy secretary himself has not yet made a public decision. A final recommendation is expected next week.

Shadow energy minister Andrew Bowie seized on the moment, saying: “It suggests that the PM does not trust Ed Miliband to take a decision of this magnitude.”

The Government has promised to decide on the proposal before the summer auctions that will award subsidies to key offshore wind energy projects. Developers are warning that uncertainty caused by the proposed reforms may lead to higher bid prices or even cancellations.

The CEO of Scottish Power, Keith Anderson, urged ministers to exercise caution and not “snatch defeat from the jaws of victory” by pushing ahead with drastic reforms at a critical time for Britain’s wind energy generation.

Meanwhile, the Department for Energy Security and Net Zero has declined to comment on what it called “speculation,” and Miliband is also considering a softer alternative: Adjusting the current national pricing model to better reflect local energy flows without full zonal separation.

The debate has highlighted broader frustrations with the existing system, which critics say distorts price signals and can lead to inefficient use of wind turbine technology and energy storage.

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With high energy bills already a top concern for voters and Labour pledging pre-election cuts of £300 per year, any change that risks increasing prices in the South could become politically toxic.

For now, zonal pricing remains under review, but its future and that of Britain’s energy strategy may soon be decided by the balance Starmer must strike between economic efficiency and political risk.

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Source: The Telegraph