The plan to set up electricity bills of people has been dropped by the government where they live.
Energy Secretary Ed Milliband said that in April the government was considering zonal pricing, but said on Thursday that it would improve the current national pricing system.
Zonal pricing supporters say that it may reduce the bill in more energy generating areas such as Scotland, although some energy firms say it may fear investment.
Energy UK, which represents the industry, welcomed the government’s decision, while conservatives called Miliband’s promise of low electric bills “a fantasy”.
The current power pricing system means that everyone in the country pays the same flat rate at all times, even if they live, but critics argue that the price is calculated at any time on the basis of the most expensive electricity generated in the country.
Greg Jackson, the founder and chief executive officer of the octopus energy, told the BBC that the zonal pricing works in countries such as Australia, Sweden and Italy and calculates that it can “reduce the bill of about 100 pounds per year for most homes”.
Supporters also say that zonal pricing can encourage energy to find the starvation industries closer to energy sources, such as Scotland where the supply is more than the demand demand, and away from cities with densely populated.
However, energy provider SSE stated that zonal pricing “will add the risk to the system”, arguing that the national pricing creates “a stable and investment environment”.
The firms had warned the government that a major overhaul of electricity pricing would have stopped bidders for the upcoming auction of Akshaya projects later this year.
The SSE welcomed the “very important policy clarity” from the government’s announcement, but the Cornwall Insight chief advisor Kate Mulwani said, “Clarity is not the same as resolution”.
He said, “This step will not solve the deeper root issues in the Great Britain’s electricity market, and it should not be used as an excuse to continue business as usual,” he said.
The decision to live with national pricing comes after three years of consultation. In April, Miliband BBC’s pricing improvement was “an incredibly complex question”.
“There are two options, zonal pricing and improvement in national pricing,” he said at that time.
“Whatever path we go below my lower line, that bill has fallen, and they should fall throughout the country.”