Scotland is “likely” to remain in a single energy market with the remainder
of the UK in the event of independence, according to Big Six supplier SSE.
SSE said it has been undertaking work to manage the “uncertainty” and
“increased legislative and regulatory risk” associated with the
independence referendum.
It has concluded that “a single energy market in Great Britain would be the
most likely outcome in the event of a Yes vote”.
In a business update to investors, SSE said: “While SSE believes that a
single energy market in Great Britain would be the most likely outcome in
the event of a ‘Yes’ vote, it has long recognised that the processes of
negotiation between the Scottish Government, the UK Government and the
European Union following a ‘Yes’ vote would be likely to take time, be
complex and may result in changes to the existing single energy market.
“The uncertainty associated with any constitutional change represents
increased legislative and regulatory risk, of which SSE has to take account
in making decisions.
“SSE has already put in place arrangements to ensure that it takes account
of this uncertainty in its decision-making and is undertaking work to
ensure that it has a clear view of the issues that would arise should there
be a ‘Yes’ vote, and is in a good position to engage constructively with
the Scottish and UK governments in the event of Scotland ceasing to be part
of the UK.
“SSE’s approach is to ensure that its operational and investment decisions
continue to meet the needs of all of its networks and energy supply
customers in particular, while safeguarding the interests of investors.”
The independence referendum is one of a number of risks SSE is currently
managing, a list which includes Labour’s proposed energy price freeze,
Ofgem’s price control measures (RIIO-ED1), and a regulatory probe which is
widely expected to result in it being referred for a full-scale two-year
competition investigation.
It added: “More broadly SSE, in common with other energy companies, is
exposed to a range of geo-political, market and other risks which it will
continue to manage through financial and operational discipline.
“In respect of both the possible retail price freeze legislation and the
RIIO-ED1 and competition study processes, SSE will continue to argue
strongly for policies and decisions that are fair to energy bill payers and
to investors and support the delivery of secure, lower carbon and
affordable supplies of electricity and gas over the long term.”
The Scottish Government’s Scotland’s Future paper states “a single GB-wide
market for electricity and gas will continue with the current market
trading arrangements”.
But UK Energy Secretary Ed Davey insisted that the SNP’s plan “goes against
all commercial logic” and independence will not mean “a continuation of
business as usual”, in a speech to the Scottish Renewables conference last
week.
Perth-based SSE (formerly Scottish and Southern Energy) is the UK’s second
largest energy supplier.
SNP MSP Mike MacKenzie, a member of Holyrood’s economy, energy and tourism
committee, said: “It seems that scarcely a day goes by without another of
the No campaign’s scare stories crumbling in the face of reality.
“The conclusion by SSE that it expects a single energy market to continue
after a Yes vote, as set out in Scotland’s Future, has left the No campaign
once again looking extremely silly. No wonder they are slipping in the
polls, as the Yes campaign gains ground.
“The fact of the matter is that Scotland’s abundant energy resources are
absolutely vital to keeping the lights on in the rest of the UK, which is
why continuing to work closely with our friends south of the border after a
Yes vote is simple common sense.
“Today’s intervention by the energy experts is another major blow to the
anti-independence campaign, whose ridiculous claims are just not being
taken seriously by people in Scotland.
“No wonder Professor John Curtice said in today’s Times ‘The No campaign
would appear to be at risk of becoming an irritating background noise to
which nobody listens any more’.”
Shadow energy minister Tom Greatrex said: “Today’s announcement from SSE is
a timely reminder about the risks and uncertainties posed by the prospect
of Scotland leaving the UK.
“They join a growing list, from engineering firm the Weir Group to turbine
manufacturer Infinis, who have warned that separation would cast doubt on
the prospects of Scotland’s renewable energy industry, which currently
employs more than 10,000 people.”
Scottish Energy Minister Fergus Ewing said: “We welcome SSE’s views on a
single energy market for an independent Scotland and the rest of the UK,
which will be in everyone’s interests.
“Affordable home energy and the ability of vulnerable consumers to heat and
power their homes is of utmost concern for this Government. We welcome that
SSE supports our intention to remove costs of vital energy efficiency
measures from customers’ bills and to meet these from central government
resources.
“Recent UK Government changes to these funds are a poor substitute, which
reduce their effectiveness while still leaving customers facing additional
costs through their energy bills.
“While we welcome SSE’s confirmation that it will proceed with investment
in recently consented Beatrice offshore wind development, we are clearly
concerned that uncertainty over future investment conditions and returns
has led company to place other renewables developments on hold.
“Scotland’s huge offshore renewables resource will have a major role to
play in meeting future UK energy needs – but UK Government’s half-hearted
and delayed reforms to energy market are a serious threat to the vital
investment required.”
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