Ed Miliband's postcode pricing plan under pressure as Starmer steps in amid fears of higher energy bills

Downing Street has contacted energy industry leaders in recent days to signal Sir Keir Starmer's direct oversight of the zonal pricing proposals being considered by Energy Secretary Ed Miliband, the Telegraph has reported.

Number 10 officials have requested a further assessment of the costs and benefits, raising the possibility that the policy could be abandoned or delayed.

The proposed system would divide Britain into different pricing zones based on local electricity supply and demand, replacing the current single national price structure.

Under zonal pricing, Britain would be split into multiple regions with electricity costs determined by local supply and demand rather than a single national rate. The system would result in higher wholesale power prices for London and the South compared with Scotland and the North, where most wind farms are located.

According to analysis by FTI Consulting, the reforms could save consumers £52 billion over 20 years, equivalent to £50 to £100 off annual bills.

The study found that households in almost every area would benefit overall, despite regional price variations.

The South East would be the only region to lose out, facing costs of £3.6 billion over the period, or approximately £150 million annually. However, experts suggest system adjustments could ensure no households are disadvantaged.

The potential savings extend beyond household bills, with the FTI Consulting report indicating that £27 billion less would need to be spent on major grid upgrades under the reforms.

This would result in nearly 2,000 fewer miles of cables being required across the country.

Supporters argue the cheaper electricity in Scotland and the North could attract investment in power-intensive facilities such as data centres and hydrogen electrolysers.

The reforms aim to capture efficiencies by reducing the cost of electricity near wind farms and cutting payments to wind farms for switching off during periods of oversupply.

Whilst Miliband's officials are reportedly supportive of zonal pricing, the Energy Secretary himself has not yet declared his position on the matter.

Opposition to the plans has emerged from Reform UK, with the party's energy spokesman Richard Tice calling zonal pricing "a trick designed to try to cover up the ever-rising energy bills we face because of subsidies to renewable energy".

Nigel Farage has made net zero and energy costs a key campaign issue, pledging to fight renewable power projects and pylon construction across the countryside. Speaking in Scotland this week, he likened the Government's net zero policies to "the next Brexit".

Shadow energy minister Andrew Bowie suggested the Prime Minister's intervention indicated a lack of confidence in his Energy Secretary. "It suggests that the PM does not trust Ed Miliband to take a decision of this magnitude," he said.

Tice added: "Keir Starmer is now panicking over the costs of renewables and the loss of votes to Reform."

Despite the political controversy, a parliamentary committee has warned that the Energy Secretary may need to implement zonal pricing to meet climate targets.

The Lords industry committee report stated that Miliband is likely to miss his goal of making the electricity grid 95 per cent carbon free by 2030 without embracing the regional pricing system.

The committee argued that splitting Britain's single electricity market into almost a dozen regions would encourage companies to build renewable infrastructure where prices are high, reducing the need for new pylons and cables.

"Regional zonal pricing should enable better use of existing grid capacity and lower the cost of electricity, provided that the transition and its risks are managed well," the report said.

Baroness Taylor of Bolton, the committee's chairman, warned: "Time is already running out, and there is no room for complacency."