The UK's three biggest trade unions have asked Ed Miliband to rule out energy market reforms which could spell the end of ScotWind and 25,000 jobs in the north and north-east of Scotland.
GMB, Unite and Unison have called on the energy secretary to resists calls to shift the UK to 'zonal' pricing amid fears it will hit growth and force manufacturers to scale back investment.
It creates a further headache for Mr Miliband after SSE boss Alistair Phillips-Davies said plans to invest tens of billions in Scottish renewables projects would "all be in jeopardy" if the UK Government goes zonal.
The government is considering major reforms to the UK’s energy pricing system as it seeks to decarbonise the electricity grid by 2030.
It is looking at two options: reforming the current national pricing system or a radical approach known as “zonal” or “locational” pricing.
This would split the country into between seven and 12 zones, each of which would have different wholesale prices based on their local energy mix.
Concerns
Supporters, including Greg Jackson, the chief executive of Octopus Energy, argue that it would help with Labour’s pledge to drive down consumer bills.
However, unions and business groups disagree, and over the weekend wrote to Mr Miliband and Jonathan Reynolds, the business secretary, urging them to rule it out.
They argue that zonal pricing would increase costs for heavy industries like carmaking, ceramics and oil refineries while undermining the government’s upcoming infrastructure and industrial strategies, which are seen by No 10 as vital for boosting economic growth.
The signatories include the trade bodies UK Steel, Ceramics UK and British Glass, as well as the unions. RenewableUK and Solar UK, which represent many of the biggest renewable energy firms in the country, have also signed it.
In the letter, published in The Times, they complain of a lack of “clarity” on how zonal pricing would work, including how energy-intensive industries and their investors would be protected from the reforms. They claim that their concerns have been dismissed or not “taken seriously”.
“(Adopting zonal pricing) will undermine the UK’s upcoming National Infrastructure Strategy and Industrial Strategy in the summer given the impacts this uncertainty will have on our operations and prospective investment plans," the letter says.
SSE says zonal reforms would take until at least 2032 to deliver and would jeopardise plans laid out by Mr Miliband to deliver a clean power system by 2030.
And Mr Philips-Davies said the policy would push up the cost of the energy transition because wind farm developers would have to seek bigger returns to compensate for the unpredictability.