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Ofgem 'u-turn' welcomed
02/03/2010
Energy Minister Jim Mather today welcomed a decision by Ofgem to drop a proposal that would have seen Scottish power generators pay even more to use the grid.
The locational Balancing Services use of system charging, also known as congestion charging, could have placed an additional cost on Scottish users - over and above the locational transmission costs which already disadvantage Scottish generators.
The move comes after the Energy and Climate Change Committee of the House of Commons last week recommended an independent review of transmission charging methodology.
Jim Mather said:
"With our vast natural resources, we can be the clean, green energy powerhouse of Europe. Yet the current approach for charging for connection and use of the grid is a significant barrier to encouraging renewable development - at the very time when we need to grow our green energy sector.
"We are working with DECC, Ofgem and National Grid to deliver Scotland's renewable energy potential and ensure that new renewable projects are connected as quickly and efficiently as possible. Together we must reinforce our grid network to connect and transport the huge amounts of renewable energy that Scotland can produce. And we are working to ensure the transmission charging regime and the costs of managing grid constraints are fair and equitable for all generators, regardless of where on the grid they connect.
"The decision to drop the proposal to target the costs of managing grid constraints at Scottish generators is welcome evidence that Ofgem and others are listening and realise that renewable generation in Scotland should not be penalised.
"Yet more needs to be done and we continue to press for a level playing field and other necessary changes to the GB energy regulatory framework that help Scotland deliver a low carbon, sustainable, clean energy future. Having accepted the argument that constraints costs should not be targeted at Scotland, we will now focus on pressing Ofgem and National Grid for a fairer deal for Scotland on transmission charges."
Mr Mather last week called for an independent review of electricity transmission charging.
Locational charging methodology levies higher charges on generators furthest from the main centres of demand for connection and use of the grid. This favours generation in the southern part of the UK and presents an inbuilt bias in the UK transmission regulatory system against Scottish based generation. As a result, Scottish generators produce 12 per cent of UK generation, but account for 40 per cent of the transmission costs, or about £100 million per year more than their fair share.