Scotland 'could have lowest energy bills in Europe' if new pricing structure introduced

Industry chief Greg Jackson wants household energy bills need to be calculated on a regional basis.

Scotland could have the lowest energy bills in Europe, a leading industry figure has predicted.

Greg Jackson, boss of Octopus Energy, believes household fuel bills should be calculated on a regional basis.

The businessman has argued prices should be based on local generation - meaning Scotland's abundant renewable energy could lower costs.

Zonal pricing is already used in other countries like Australia, Italy and Sweden.

The UK's current system sees the wholesale price of electricity apply across Britain and is based on the cost of the most expensive unit generated across the area at that time.

Jackson, whose company is now the UK's largest domestic energy supplier, described the existing system as "crazy."

He said it does nothing to bring down bills and that billions are being wasted in payments to switch off wind farms when demand is low.

He told the BBC that under zonal pricing, bills in Scotland - where there is "a lot of renewable generation" - would be "cut very significantly from where they are now".

He said that amount would vary across Scotland, but some bills would fall by hundreds of pounds a year.

But other companies, including Scottish Power and SSE are firmly opposed to the idea.

They co-signed a six-page letter to the UK Government raising "grave concerns" around zonal pricing and saying it would do nothing to reduce bills.

SSE said those in favour of the scheme had used "flawed logic" and that it would create a "postcode lottery" for energy bills.

Scottish Power chief Keith Anderson said there was a more pressing need to build large new transmission pylons installed to increase the amount of new renewable energy being shifted around the country.

"What we're saying is, let's build it, let's get all the economic growth for the UK, let's get gas away from the electricity system, let's bring down people's bills and then look at whether we need a zonal pricing system," he said.

But Octopus boss Jackson insisted more renewable energy capacity could still be built in Scotland.

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