June 17 2015

Scottish Transmission Charging 

The Chief Executive of Scottish and Southern Electric (SSE) has once again called for transmission charges to be "flattened out" by which he means a single national price for electricity transmission charges rather than the existing locational based charging structure.



The question for me is... why is he asking?

SSE have not cited the complexity and opacity of the charging arrangements - which - despite the best efforts of the National Grid Company to explain their charging algorithms - would have been fair comment.

Nor have they, this time at least, cited the fact that the existing arrangements impose higher costs on Scottish generation than on generation in, for example southern England. This, perhaps, is in recognition of the fact that the SSE generation portfolio is evenly spread across the UK.

Instead the claim is that the switch would “make things far simpler for customers and facilitate switching and tariff comparison”. This however is largely incorrect as transmission charges for demand are zonal and within each zone charges are equal for all suppliers. The only customers who may benefit from the simplicity of a flat transmission charge are the largest multi site corporations.

Customers in the North of Scotland (SSEs historic service area) are in the zone of lowest transmission charges. A move to a flat transmission charge would mean an increase in bills for these customers.

SSE surely understands all these nuances. So perhaps the call is more political than commercial. It is barely a month since the Scottish National Party won 56 of the 59 MPs in Scotland. The SNP has previously called for flat transmission charging. Their call is likely driven by a desire to support Scottish generation and protect generation jobs in Scotland.

The SNP is now the political force in Scotland. We should probably expect to see more Scottish based business leaders aligning their voices to the SNP view.