And this is where the political trouble could start. Consumers really dislike existing differences in energy bills between regions, said Kate Mulvany, principal consultant at Cornwall Insight.
“There’s a sense of unfairness,” she said. “People live where they live. They weren’t involved in the decision of where to put Sizewell C [a nuclear energy plant], or the geography of the North Sea shelf, which happens to be amazing for offshore wind. It’s out of their control.”
Winners and losers
Most experts say that households could be shielded from a postcode lottery on bills so long as the wholesale price was not passed directly onto domestic consumers. But precisely how you do this would be a “political challenge” for Coutinho and her advisers, says Josh Buckland, a former Number 10 energy adviser and now a partner at Flint Global.
This includes questions over whether protecting households and small businesses from higher prices would mean the impact of the reforms fell on “high demand users” — like factories — and on power generators themselves, who could face varying regional prices for their electricity, Buckland says.
“It’s not just a theoretical change, it’s a real and material change. And from the work I’ve done in politics, it’s the losers who tend to shout the loudest, even if the change has a strong economic rationale,” he added.
Long grass
The scale of the reform means that the imminent consultation may do little more than narrow down the government’s options. The big decisions could be left to whoever is in charge after the general election, expected this fall.