David Ross
It wasn’t in George Osborne’s Budget speech, but it was in one of the
voluminous documents which accompanies the Chancellor’s star turn at the
Dispatch Box.
A small section numbered 1.217. It says: “The government will consult on
reducing electricity distribution costs for consumers in the North of
Scotland, to ensure that they pay no more for electricity distribution than
consumers in the next most expensive region. The government estimates that
this could save an average household in the North of Scotland around £30
per year on their electricity bill.”
Thirty quid a year or 57p a week is unlikely to make a huge amount of
difference to those suffering fuel poverty, although every little does
help. Members of the Western Isles Poverty Action Group were talking about
figures ten times as much when they launched their campaign back in the
autumn against the fact that Highlands and Islands households pay 2p a unit
more than consumers elsewhere in Scotland, despite the high fuel poverty
figures in the area
According to the Treasury distribution charges are the main driver for
regional variations in electricity costs. There are 14 regions across the
GB electricity market, which means suppliers charge up to 14 different prices.
The industry and the Treasury hold that high costs in the North of Scotland
are because of the vast distances the electricity network has to traverse
to cover a relatively sparsely populated area.
So the government will “urgently consult how to bring down costs so that
electricity distribution costs in the North of Scotland are level with the
next most expensive GB region.”
It is not quite clear how this fits in with the investigation the
Competition and Markets Authority (CMA) launched last year into “the supply
and acquisition of energy in Great Britain” . This many hope, including the
likes of SSE’s chief executive Alistair Phillips-Davies, will lead to a
simplification of the system and herald national charging so customers pay
the same rate whether they live in Stornoway, Stromness, Stirling,
Sheffield or Swansea.
As the Western Isles Poverty Action Group argued, without the 2p surcharge
it could mean £300 saving on 15,000 units, making a real difference.
But the CMA is not due to report before November, six months after the
election.
So it is perhaps not surprising that Danny Alexander, Chief Secretary to
the Treasury was sure the prospect of £30 would help in the meantime.
“Bringing electricity costs down by around £30 a year could have a real
impact on families across the North of Scotland, particularly when combined
with existing UK government schemes for reducing electricity costs across
the region. Along with policies like the rural fuel rebate, as well as the
UK’s continuing economic strength, our Highland voice is being heard at the
heart of government which is making a real difference for people across the
North of Scotland.”
But it is all very curious that Treasury estimates there it only costs £30
a year to send power to the Highland and Islands when renewable energy
projects in the Highlands have been charged over £20 per kilowatt hour to
send the electricity to the south.
However maybe we are missing an important point here. Although £30 a year
can be presented as a fairly derisory saving, it surely is significant that
HM Treasury has effectively ceded the point that the present charging
regime is unfair to those who live in the Highlands and Islands and
elsewhere. Something that has been glaringly obvious for sometime to anyone
who cared to ponder the ludicrous discrepancies in the market, between
power that is generated and that consumed in the north.
Perhaps it is only pinhole of principle in the armour of the electricity
industry, but it should widen and become more difficult to ignore. If it
does, it is largely down to the Western Isles Poverty Action Group and its
chairman Lewis councillor Angus McCormack for having so effectively
highlighted the issue.
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