Energy - locational charging

I was at a meeting of the STUC Energy Group today. Whilst UNISON is better known for its health and local government membership, we are also the biggest trade union in the Scottish energy industry.

There was the usual wide ranging discussion on energy developments in Scotland. One positive development has been an Ofgem consultation paper that addresses one of our major concerns - the reform of locational transmission charges.

National Grid, the company appointed by Ofgem to manage the GB grid, implement a charging regime that levies higher charges for access and use of the transmission network on generators furthest from the main centre of demands to encourage generation closest to where it is needed the most. These charges act as a disincentive to investment in renewable and other energy generation in Scotland. Locational charging means Scottish generators produce about 12% of UK generation, but account for 40% of the transmission costs, or about £100 million per year more than generators in the South.

Ofgem has announced a review called Project TransmiT, that would “consider whether the way in which grid costs are shared between users needs reforming” . UNISON has long argued that a flat rate charge, the 'Postage Stamp' principle should apply. Lets hope that this time Ofgem drops its market economic ideology in favour of a system that encourages diversity in supply from sustainable sources.