In a rare welcome move, the UK government has dropped plans to turn electricity pricing into a postcode lottery.

The proposal, known as zonal pricing, would have meant people paid different amounts for their electricity depending on where they live — regardless of their usage, income, or ability to absorb rising costs.

It’s a policy that rightly caused outrage, and now it has been scrapped.

But let’s not rush to hand out praise without first examining how we got here — and how long it took.

This was not a swift policy rethink – it was the result of three long years of dithering, spanning two governments: two years of inaction and quiet planning under the Conservatives, followed by a further year of indecision under Labour.

The original proposal emerged as part of discussions around reforming the electricity market to encourage cleaner, cheaper, and more localised energy.

In theory, zonal pricing could have meant cheaper bills for areas like Scotland, which produce more renewable electricity than they consume.

But in practice, it would have created a divided energy system, penalising people in urban and less energy-rich regions, including many in England and Wales.

A postcode lottery, plain and simple

Critics were quick to label it a “postcode lottery” — and rightly so.

Under the scheme, someone living in rural Aberdeenshire could have paid significantly less than someone in inner-city Birmingham or Liverpool, based purely on proximity to a wind farm or solar array.

Worse still, this wasn’t some fringe idea, quietly shelved.

The Conservative government spent two years consulting, reviewing, and floating the idea, while doing little to communicate the risks to the public.

Then, under Labour, Energy Secretary Ed Miliband picked up the baton, saying in April that zonal pricing was still “on the table.”

Let’s be clear: Ed Miliband did say his priority was to bring down bills for everyone — but the very fact that zonal pricing was being seriously considered until this month – July 2025 – after three years of public concern and industry warnings, is a sign of how disconnected our energy policy debate has become from the people it is meant to serve.

Industry warning signs

Even the energy industry, often more concerned with profit than public interest, raised alarms.

Companies like SSE warned that zonal pricing would create “added risk” and destabilise investment in renewables.

Energy UK, the body representing the energy sector, welcomed the government’s decision to walk away from the idea, clearly relieved that the uncertainty has finally ended.

Others, like Octopus Energy, remained supportive, arguing zonal pricing could cut bills by around £100 per year for many households.

But even that figure is questionable, and comes with significant regional disparities and economic consequences that would disproportionately affect low-income areas.

Clarity is not resolution

In the end, the government opted to stick with a national pricing system — a decision that avoids a dangerous precedent but doesn’t fix the deeper issues in the electricity market.

As Kate Mulvany from Cornwall Insight rightly put it: “Clarity is not the same as resolution.”

The national system itself is flawed.

It sets prices based on the highest-cost electricity being generated at any given moment, which drives up bills unnecessarily.

Reform is still needed — but reform that focuses on fairness, transparency, and reducing household costs for everyone, not just those lucky enough to live near a wind turbine.

Political credit — and accountability

So, yes — credit to the government for eventually doing the right thing.

But don’t let them pat themselves on the back too hard.

This policy should never have been on the table in the first place, and the three years it hung around — causing uncertainty for households, investors, and the industry alike — are three years of avoidable delay and distraction.

Let’s not forget that it was the Conservatives who let this idea fester, and Labour who failed to kill it quickly when given the chance.

The end of the postcode lottery is a victory — but a messy, belated one.

Now the real work must begin.

The energy system is broken.

Bills are still too high.

Investment is too risky.

And market reform must come with one unshakable principle: fairness for all — no matter where you live.