Exclusive: The Scottish Government has refused to set out a position on zonal pricing for energy despite SNP activists bragging that it would reduce energy bills.
The SNP Government has been accused of “rank hypocrisy” over its refusal to back plans it admitted would reduce energy bills for Scots households – and siding instead with energy giants. John Swinney relaunched his campaign to break up the UK by insisting it would cut energy bills.
He even published a report called “It’s Scotland’s Energy” where he alleged that England was stealing all of Scotland’s renewable and profits. He claimed Scottish independence would lead to energy bills being slashed by a third but failed to provide evidence to back this up.
SNP activists have long utilised a quote by Octopus Energy CEO Greg Jackson where he claimed that under zonal pricing, bills in Scotland – where there is “a lot of renewable generation” – would be “cut very significantly from where they are now”. He added that Scotland could get the lowest energy bills in Europe.
But the Scottish Government has been reluctant to back this amid lobbying from other power firms like Scottish Power and SSE. And now internal documents obtained by the Scottish Daily Express revealed that SNP Ministers remain on the fence, even though they admit it could save Scots money.
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Zonal pricing is already used in other countries like Australia, Italy and Sweden and would split the electricity market in Great Britain into several different geographical “zones.” Areas with a lot of energy infrastructure, like the wind farms in the north, would get cheaper electricity.
The UK’s current system sees the wholesale price of electricity apply across Britain and is based on the cost of the most expensive unit generated across the area at that time. Energy firms claimed that adopting zonal pricing would lead to developers cancelling projects and investing money elsewhere.
When Labour took over power it consulted on reforming the energy market to help people save money, with zonal pricing considered as part of this. The Scottish Government were involved in these discussions, and also met power companies as well who were campaigning against this.
Internal documents suggested that SNP Ministers refused to back zonal pricing despite potentially huge savings for Scots, despite Nat politicians loving to boast that the party is “stronger for Scotland.” They claim to be the only party sticking up for Scotland.
One briefing, written for John Swinney ahead of a roundtable on zonal pricing, read: “I am concerned about the impact high energy bills have on people in Scotland, with 34% of households in Scotland in fuel poverty, and we continue to call on the UK Government to take action to address this. But I am also concerned about a decision that could result in undermining investment in renewable generation in Scotland.”
Another note for then-Energy Minister Alasdair Allan read: “Industry has expressed concerns on the proposed introduction of Zonal Pricing. As offshore wind developers are unable to relocate projects to respond to locational signals, the introduction of zonal pricing could have significant impact for projects based further away from demand, which may impact consumers and investor confidence.
“The industry is concerned that the increased risks associated with zonal pricing will increase project financing costs. Conversely however, zonal pricing may deliver reduced costs for Scottish consumers.”
He made asks of the UK Government: “Reforms must deliver reduced costs for Scottish consumers, ensure our communities feel the benefit of the energy transition and protect investment in our renewables industry. Mitigations for any potential negative impacts must be put in place and clearly signalled to the market at the same time as the decision is announced.”
In the end, Westminster decided not to go ahead with zonal pricing. Rivals blasted the SNP for showing “rank hypocrisy” by publicly calling for these reforms but privately conceding that they were not a good idea.
Scottish Conservative shadow energy secretary Douglas Lumsden MSP told the Scottish Daily Express: “This is rank hypocrisy from SNP ministers. They cannot credibly claim that they want to achieve this, while simultaneously abandoning our oil and gas sector. The Scottish Conservatives are the only party at Holyrood with a plan that will protect jobs across energy sector and bring bills down by delivering an affordable transition.”
A Scottish Government spokeswoman said: “Now that zonal pricing has been discounted, we have been clear the UK Government must immediately set out what reformed national pricing will mean for bill-payers, developers and investors, and that it takes urgent action to address the high energy bills faced by the people of Scotland – in an energy rich country like Scotland, people should not be struggling to pay their bills.
“Given the significance of Scotland’s renewables sector in achieving the UK and Scottish Governments’ shared clean energy ambitions, Scottish Ministers must be fully involved in decisions on reforming the national energy market.”
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