Electricity bills will shoot up if the Government presses ahead with plans to introduce different prices in different parts of the country, industry experts have warned. Energy Secretary Ed Miliband is considering so-called zonal pricing, which would mean the cost of power varied depending on where you live. Bills would be cheaper for people living near windfarms or solar panel farms, for example.

But the Fairer Energy Future campaign, which includes firms investing in renewable energy as well as trade bodies, has written to Chancellor Rachel Reeves warning the policy would be a disaster. It follows warnings from trade unions including GMB, Unite, Prospect and Community, who also oppose the idea.

Fairer Energy Future told the Chancellor in the letter: “As a group of leading renewable energy investors, trade associations, trade unions and other organisations, we are deeply concerned that changes to the GB electricity market could create unnecessary delays, drive up the cost of clean power and damage British industry.

“Your party won the election on a platform of missions – and transforming Britain. Going greener, faster, to forge a cheaper and more secure energy system, through Mission 2030 and beyond. You have also rightfully prioritised economic growth.

“A switch to zonal energy pricing, and the deep uncertainty it brings, would put all of that at risk.”

The letter highlighted research from the UK Energy Research Centre which found zonal pricing “could increase consumer costs by up to £3 billion annually”.

And it pointed out that opinion polls show 58% of people in England and Wales opposed zonal pricing, while only 14% were supportive of it.

The letter said: “All in all, there is strong evidence to show that zonal energy pricing will damage the economy, damage the government’s clean power ambitions and consumers do not want these changes.”

Ministers say they are considering the policy. Responding to a question from an MP, Energy Minister Michael Shanks said: “The Government is considering reforms to the electricity market through our Review of Electricity Market Arrangements (REMA). This includes consideration of whether to move to a zonal electricity market, where prices vary depending on local conditions, or to continue with a reformed version of our national pricing arrangements.

“Zonal pricing could have significant benefits, including through reducing the cost of energy to businesses. However, it also creates potential new risks to generators that need to be carefully considered.

“Any decisions on market reform will be based on a robust analysis of the costs and benefits.”

A decision could come in mid-2025, he said.

One of Labour’s biggest donors has said the party’s push towards clean power will be “undermined” if it fails to slash energy bills by the next election.

Dale Vince, founder of energy firm Ecotricity, said last month: “They came in promising to cut bills, the whole promise of energy independence is to get bills down and keep them there.”

Mr Vince said zonal pricing would “fragment” the energy system and create “a postcode lottery for energy bills”.

He said it will also “damage investor confidence and therefore economic growth”, echoing criticism from energy giants ScottishPower, SSE, RWE and Orsted.

“We’re five years away from hopefully achieving 100% green energy on the grid, and anything getting in the way of that is problematic.

“It seems to me a hugely theoretical idea based on a bunch of wishful thinking.”