National vs Zonal Pricing: What the REMA Decision Means for Your Business

In July 2025 the government rejected zonal electricity pricing and confirmed reformed national pricing. We explain what the REMA decision means for your business energy costs and where regional price differences will show up instead.

National vs Zonal Pricing – For two years the energy industry argued over whether Britain should split its single electricity market into regional “zones”, so power would cost different amounts depending on where you are. In July 2025 the government settled it, and the decision shapes what your business will pay for years to come.

What Was Decided

In its Review of Electricity Market Arrangements (REMA) summer update of 10 July 2025, the government rejected zonal pricing and confirmed that Great Britain will keep a single national wholesale electricity price, described as “reformed national pricing”.

Zonal pricing would have meant your wholesale cost depended on your region: cheaper in the windy, generation-rich north, and dearer in the demand-heavy south. Ministers judged the model too complex, too slow to introduce (an estimated seven years) and too uncertain for investors, with awkward regional winners and losers. You can follow the official position through the government’s Review of Electricity Market Arrangements collection.

What “Reformed” Actually Means

Keeping one national price does not mean nothing changes. The reform package includes several moving parts. A Strategic Spatial Energy Plan, led by the National Energy System Operator, will guide where new generation is built. A Centralised Strategic Network Plan sets out a 25-year blueprint for grid infrastructure. The connections regime is being reformed to clear the queue of projects waiting to plug in. And network charging, including transmission charges, is being reformed with changes targeted for delivery by 2029.

In other words, the government still wants to send locational signals that encourage generation and demand to locate sensibly. It has simply chosen to do that through network charges rather than through the wholesale price.

Why It Matters to Your Business

The headline is reassuring. There will be no regional “postcode lottery” on your wholesale rate, so a business in Cornwall and a business in Cumbria will continue to reference the same national market price for the energy commodity itself.

But the story does not end there. The locational cost differences that zonal pricing would have put on the wholesale line are instead being pushed into the non-commodity part of your bill, chiefly through transmission charges. That is why the reform of those charges is the piece to watch, and why understanding the full make-up of your bill matters more than ever. We break down every element in our guide to non-commodity costs.

For most businesses, reformed national pricing is a more predictable and manageable outcome than a sudden regional split would have been. It does not, however, mean that location stops mattering; it means the mechanism has moved from one part of the bill to another.

How to Position Your Business

Because the wholesale commodity remains national, the way you buy that commodity is still the biggest lever you control. Keeping a close eye on the market and timing your purchasing well continues to matter, whether you buy on a fixed contract or through a more flexible energy procurement arrangement that lets you manage risk actively. Our daily view of the wholesale electricity market feeds directly into the buying decisions we make for clients.

On the non-commodity side, the smart move is to understand your exposure to network charges now, before the reforms bed in, so that any changes to your regional transmission costs do not catch your budget by surprise.

What This Means for Your Business

The REMA decision removes one big uncertainty and replaces it with a clearer, if still evolving, direction of travel. Britain keeps a single electricity price; regional signals arrive through network charging reform instead. For energy buyers, the priority is to keep buying the commodity well and to stay ahead of the network-charge changes that will follow.

If you want to understand how these reforms translate into pounds on your specific contracts, our team can model it for you. Get in touch to speak to one of our energy consultants today.