The UK government has decided to rule out proposals for zonal electricity pricing within the Review of Electricity Market Arrangements (REMA), after Secretary of State Ed Miliband recognized the need to protect the security and competitiveness of the UK steel sector. UK-based trade association UK Steel has stated that it welcomes that the government has heeded its warning and shelved zonal pricing plans.
Noting that had the zonal pricing model been adopted, industrial electricity bills could have risen by more than 10 percent, UK Steel stated that this risk was especially significant for the steel sector, which is already grappling with electricity prices up to 50 percent higher than those in Germany and France. This would have threatened UK jobs, investment, and the investment needed in decarbonizing the sector.
UK Steel had raised strong objections to the plan, citing the absence of critical impact assessments, shielding mechanisms, and detailed cost-benefit analysis. Many UK steel producers are located on legacy sites - chosen for access to raw materials and logistics infrastructure - leaving them particularly vulnerable to regional cost variations under a zonal model.
