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Ministers Poised to Drop Plans for ‘Zonal Pricing’ in British Electricity Market

SCOTLAND, UNITED KINGDOM, JUL 9 – The UK Government cited risks to investor confidence and potential higher bills elsewhere as reasons to drop the zonal pricing plan despite predicted £52 billion consumer savings over 20 years.

  • On Thursday, the UK Government announced it is abandoning its planned zonal pricing scheme to maintain a single national wholesale electricity price, citing sector concerns.
  • Mounting sector criticism and No 10's concerns over infrastructure risks prompted the reversal of the zonal pricing plan, as the government prioritized investor confidence and the clean power mission.
  • Analysis shows FTI Consulting predicted £52 billion in 20-year consumer savings and £27 billion in grid-upgrade reductions, while the UK Energy Research Centre warned higher subsidies could wipe out zonal benefits.
  • The UK government’s decision to abandon zonal pricing, announced to provide certainty ahead of the AR7 auction, was supported by industry figures who said it would boost investor confidence and focus.
  • A consultation will launch later this year with NESO on reducing constraint payments, alongside publication of the Reformed National Pricing Delivery Plan to support system reform.
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Daily Record broke the news in Glasgow, United Kingdom on Wednesday, July 9, 2025.
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