{"id":73958,"date":"2025-07-16T10:47:02","date_gmt":"2025-07-16T09:47:02","guid":{"rendered":"https:\/\/grayling.com\/?p=73958"},"modified":"2025-07-16T12:26:28","modified_gmt":"2025-07-16T11:26:28","slug":"rema-national-gains-zonal-pains-the-pricing-battle-may-be-over-but-is-the-war-won","status":"publish","type":"post","link":"https:\/\/grayling.com\/pl\/news-and-views\/rema-national-gains-zonal-pains-the-pricing-battle-may-be-over-but-is-the-war-won\/","title":{"rendered":"National Gains, Zonal Pains? The Pricing Battle May Be Over, But Is the War Won?"},"content":{"rendered":"

Messi versus Ronaldo. Allyson Felix versus Shelly-Ann Fraser-Pryce. Tupac versus Biggie. Marvel versus DC. PlayStation versus Xbox. Remain versus leave.<\/p>\n

These are just a few of the countless cultural debates that have ignited passionate arguments about who, or what, is superior. Such rivalries often stir intense emotions, as each side rallies behind their favourite through statistics, personal anecdotes, and fierce loyalty.<\/p>\n

In the energy industry, a similarly contentious debate began following the launch of the Review of the Electricity Market (REMA) consultation in 2022. Despite its well-intentioned aim to reshape the electricity system to protect for future challenges, the review sparked a fractious war of words over zonal versus reformed national pricing.<\/p>\n

For context, zonal pricing divides the country into different regions, with each zone paying different rates for electricity based on local supply and demand. In contrast, national pricing, which we currently use, means a single wholesale electricity price across the entire country, regardless of local supply and demand.<\/p>\n

While many cultural rivalries remain unresolved, the clash over the UK\u2019s wholesale electricity pricing appears to have reached a conclusion.<\/p>\n

As part of its long-awaited REMA Summer update, the Government announced it would not proceed with zonal pricing, instead choosing a reformed national pricing model. The Government cited three key reasons for this decision which I\u2019ve assessed below.<\/p>\n

Certainty for Investors<\/strong><\/h5>\n

By ending speculation over zonal pricing, the Government has arguably delivered clarity for investors after years of policy uncertainty. Many in the industry feared that zonal pricing would add complexity and revenue risk due to potential price variations and lengthy implementation timelines.<\/p>\n

Yet while settling the debate, ensuring investor confidence will hinge on how the reformed national pricing is designed. Critics have quickly noted that the Government has yet to provide modelling or cost-benefit analysis of the reforms. Instead, the industry must wait for the Reformed National Pricing Delivery Plan, expected later this year. If the recent debate is any indication, the plan will likely face thorough scrutiny.<\/p>\n

Still, the Government has offered glimpses of its vision. The Strategic Spatial Energy Plan (SSEP) will play a central role, alongside reforms to Transmission Network Use of System (TNUoS) and connection charges. This integrated approach aims to guide the location of new generation, reduce congestion, and optimise grid investments.<\/p>\n

Fairness for Consumers<\/strong><\/h5>\n

The Government is also clearly concerned that consumers would have been subject to a \u201cpostcode lottery\u201d in their energy bills. Zonal pricing could have meant Scotland benefiting from cheaper electricity than the South East of England, due to differences in regional supply and demand.<\/p>\n

As such, avoiding zonal pricing is arguably a politically driven choice, with the Government keen to avoid fracturing its \u2018loveless\u2019 voter base that secured its landslide majority in the 2024 General Election.<\/p>\n

Yet whether this decision is truly \u201cfair\u201d divides opinion, particularly across generations. In our recent Grayling Energy Report<\/a> (July 2025), we discovered that a majority of those aged under 34 believe zonal pricing is fair, while most over 34 consider it unfair. The divide is starkest at either end of the age spectrum: 79% of 18-24-year-olds consider zonal pricing fair, whereas 67% of those over 65 do not.<\/p>\n

Lower Costs<\/strong><\/h5>\n

Ultimately, the thread holding this decision together is the need for Labour to deliver on its promise<\/a> to lower energy bills ahead of the next general election.<\/p>\n

Concerns over rising costs has been a constant battle for Labour since entering office, from the Welfare Reform Bill to the Family Farm Tax. These concerns have culminated in the formation of the Living Standards Coalition – a new Labour group focused on tackling the cost-of-living crisis.<\/p>\n

Proponents of zonal pricing argue that the Government has missed an opportunity to reduce electricity bills by opting for reformed national pricing. Supporters claimed<\/a> that zonal pricing might have cut electricity costs for some by \u00a3100 to \u00a3150 per year – a significant portion of Labour\u2019s pledge to cut energy bills by \u00a3300 by 2030.<\/p>\n

However, the Government is betting that its broader reforms will provide clearer investment signals, attract more capital, and help drive down costs.<\/p>\n

The key question the Government must now answer in its Reformed National Pricing Delivery plan is how much this will help reduce energy costs. Without clear communication, serious questions will be asked about the Clean Energy Mission, and overall energy transition, which has come under increasing scrutiny.<\/p>\n

With the decision now made on zonal pricing, now is the time for industry to come together and help the Government deliver. It has taken three years to reach this point: the Government, industry, and, more importantly, consumers, cannot afford any further delay.<\/p>\n

If you\u2019re working in the energy sector and want to better understand how REMA could impact your business, or how to shape policy, build infrastructure, secure consents, or strengthen corporate reputation \u2013 please contact the Grayling Energy<\/a> team: energy@grayling.com<\/a>.<\/em><\/p>\n

\u00a0<\/em><\/p>\n

By James Surallie, Senior Account Manager, Public Affairs<\/a>, Grayling UK<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"Messi versus Ronaldo. Allyson Felix versus Shelly-Ann Fraser-Pryce. Tupac versus Biggie. Marvel versus DC. PlayStation versus Xbox. Remain versus leave. These are just a few of the countless cultural debates that have ignited passionate arguments about who, or what, is superior. 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