This week’s digital edition has been given over entirely to one of the most polarising topics in energy today – locational pricing.

This summer the government has promised to update on its review of electricity market arrangements and in particular its approach to wholesale market reform. There are two options left on a table, each with their own vocal cheerleaders.

On one side we have zonal pricing (the more granular nodal pricing having already been dismissed), which would see the current national wholesale electricity price replaced by separate regional levels based on the costs of producing and supplying energy in that area. Notable supporters of this approach include Octopus Energy, Energy Systems Catapult, the National Energy System Operator and Ofgem.

The alternative is reformed national pricing. The government’s current vision of this is a bolstered network charging regime, alongside incremental reforms to balancing incentives. There are a number of nuanced versions of this espoused by different parts of the sector but the unifying opinion is that the alternative of locational pricing would be costly, disruptive and derail the energy transition. Many of the other energy retailers have positioned themselves on this side of the table, alongside generators and a number of thinktanks including Regen.

This is a topic Utility Week has been covering for many years but with this crunch decision on the horizon the arguments on both sides are getting more impassioned. As the following pages show, very little of this debate is in a shade of grey. Those who support locational pricing, do so vociferously. Their opponents are no less adamant they are in the right.

It’s a conversation that matters enormously. The implications for energy companies of all kinds are significant but ultimately it is the impact on the bills of domestic and business customers that will be the real test. Not least among these are water companies, one of the most energy-intensive industries and one that is by default tied to its particular location.

The idea of this report, masterminded by our insights editor Tom Grimwood, is to set these opposing views side by side and drill into the differences. The coverage starts with a summary of a head-to-head debate featuring two representatives each from the pro and anti locational pricing camps. Allowing them the opportunity to interrogate each other’s points in a robust but respectful way is valuable in moving this important conversation forward.

These opinions are based on rigorous research and an understanding of the wider implications on the energy system. However, for those without the relevant PhD, the interwoven hypotheticals of locational pricing can quickly confound. This is a problem not just for the legitimacy of having public buy-in for such fundamental changes but ensuring policymakers are basing their decisions on a proper understanding of the implications. There is scepticism about whether this really is the case at the moment.

The heated debate played out over the following pages shows how divided the energy sector has become on this issue. But before 2025 is out, one of these cohorts will be left disappointed. The intriguing next question is how they will respond to this loss and whether the sector can put aside its differences in the common quest to accelerate the energy transition.