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Determinations on access to Scotland-England Interconnector
30/12/1998
ISSUED ON BEHALF OF THE OFFICE OF ELECTRICITY REGULATION
Professor Stephen Littlechild, Director General of Electricity Supply, today issued determinations on three requests for access to capacity on the Scotland-England Interconnector.
He said:
"Capacity is not insufficient to accommodate BNFL's requirements, and I specify that ScottishPower should make available 196 MW for the period January 1, 1999 to March 31, 2002. I look to ScottishPower to put in place revised arrangements to ensure that BNFL and other competitors can continue to have access beyond that period.
"As National Power has not at this stage provided sufficient information in support of its application, I decline to determine whether capacity is insufficient to meet its requirements or to settle terms.
"I do not approve ScottishPower's request to reserve the whole of the Interconnector capacity to its own Generation Wholesaling Division."
Discussing the responses to his earlier consultation on Interconnector access, Professor Littlechild said:
"A number of ScottishPower's actions and statements, including its responses to BNFL and national Power and its request to reserve all the available Interconnector capacity to its own Generation Wholesale Division, sit ill with its statutory duty to make the Interconnector avialable to its competitors on terms which neither prevent nor restrict competition in generation and supply. I am also not satisfied that commercial information has been as protected as it should be.
"There is scope for improving the Access and Allocation Codes to more adequately meet the companies' existing statutory duties and licence conditions in the evolving circumstances of the Scottish market. Each transmission licensee needs to have in place a considered and documented process for dealing with applications for use of the Interconnector. This should include criteria setting out the circumstances in which it might be appropriate to provide or refuse access, and details of any other requirements on applicants.
"Revised Codes, reflecting the position in the light of the present determinations, should be in place by April 1999. I look to each of the transmission licensees to make initial proposals by mid-February 1999, for discussion with my office and interested parties, with a view to securing my approval of revised Codes by the end of March 1999.
"In addition, I look to ScottishPower and Scottish Hydro-Electric to bring forward more appropriate charging arrangements, particularly for imports into Scotland in the light of Pool arrangements for superposition. These will be taken into account within the present review of the Scottish transmission price controls.
"It is apparent that there is a significant body of supply for more substantial changes to the present procedures for allocating Interconnector capacity. These changes will require a longer period of analysis and discussion, and may well require supporting changes in the licences.
"A review of the options will be undertaken in 1999, in parallel with the Reviews of Public Electricity Suppliers and the review of Scottish trading arrangements, and in consultation with licensees, users and customers. If appropriate, certain licence modifications to accommodate revised procedures could be proposed with effect from April 2000. Full revisions to Interconnector allocation procedures, which will need to take into account prospective changes to the trading arrangements in England and Wales, should be in place by April 2002."
Professor Littlechild added:
"I have elsewhere argued that separate ownership of transmission in Scotland, as in England and Wales, would meet the concerns about competition expressed by many parties, including in response to this and other consultation papers. Several respondents suggested that establishing independent ownership or control of the Interconnector would be advantageous even if no change is made to the ownership of the rest of the transmission system. In the light of the evidence revealed by these determinations, I agree with this."
BACKGROUND
1. Copies of the determinations are available from the OFFER web-site and the OFFER Library (0121 456 6377/6355).
2. OFFER published its consultation paper on issues concerning access to the Scotland-England Interconnector on October 29, 1998.
3. BNFL applied to ScottishPower in March 1993 for an agreement for use of the Interconnector to take effect from April 1, 1998 in respect of the output of the Chapelcross power station. After lengthy negotiations with ScottishPower and Scottish Hydro-Electric, on May 5, 1998 BNFL asked the Director General to make a determination. Temporary arrangements have been put in place since then to enable BNFL to continue to use the Interconnector, but from January 1, 1999 ScottishPower may terminate the agreement by giving BNFL at least 15 working days' notice.
4. On November 10, 1997, National Power requested a determination from the Director General that ScottishPower should grant its request for Interconnector access, and also that "the determination makes provision for the charges payable for such access".
5. On August 10, 1998, ScottishPower's Transmission Business asked the Director General to approve the reservation to ScottishPower's Generation Wholesale Division of the whole of the Interconnector capacity to which ScottishPower's Transmission Business was contractually entitled.
OFFER Press Releases can be accessed on the Internet at:
http://www.coi.gov.uk/coi/depts/GER/GER.html
OFFER Web-site at: http://www.open.gov.uk/offer/htm
News Release: AG2002/98
30 December 1998