En­ergy costs more in north than any other re­gion of UK

MP de­mands re­view of ‘crip­pling’ pric­ing struc­ture Bills: Sub­sidy helps to cut costs

The Press and Journal (Inverness, Highlands, and Islands) - - NEWS - BY LOUISE GLEN

Peo­ple in the north are pay­ing be­tween four and six pence a unit more for elec­tric­ity than the rest of the coun­try.

In the most ex­treme ex­am­ples, prices can be more than 21p per unit whereas in parts of Eng­land and the cen­tral belt av­er­age unit prices are as low as 14p.

The dis­par­ity was re­vealed by In­ver­ness MP Drew Hendry who is de­mand­ing a re­view by Ofgem. But the in­dus­try reg­u­la­tor says it is for the gov­ern­ment to re­write the rules on fuel charges.

Mr Hendry, who sits on Par­lia­ment’s en­ergy and in­dus­trial strat­egy com­mit­tee, says the high prices paid by peo­ple in Grampian, the High­lands and is­lands and Mo­ray is crip­pling house­holds.

He said: “The ev­i­dence we have been told of in our com­mit­tee is some­thing peo­ple in the High­lands and is­lands have sus­pected for a long time.

“We are pay­ing more: four to six pence more, for every sin­gle unit we use. And more than any­where else in the UK.

“The in­equal­ity is even more galling as we are pro­duc­ing vast amounts of the elec­tric­ity through the wind farms and hy­dro pro­duc­tion in the area.

“Ba­si­cally I have now asked the com­mit­tee to look into the mat­ter with ur­gency. There isn’t an in­quiry at the mo­ment but we need to pur­sue Ofgem as the reg­u­la­tor to hold an in­quiry and make a de­ci­sion.

“In Aviemore we have had an en­ergy ad­vice surgery and some peo­ple are now sav­ing hun­dreds and thou­sands of pounds – it can’t be right that ac­cess to in­for­ma­tion, and cheaper prices, is only if you know about it.”

Back­ing Mr Hendry is en­ergy provider Scot­tish and South­ern Elec­tric (SSE). A spokesper­son said: “Re­gional pric­ing vari­a­tions are based on the dif­fer­ent costs to dis­trib­ute en­ergy to more re­mote ar­eas.

“Higher net­work charges af­fect not only the north of Scot­land but also north Wales and Mersey­side.

“SSE En­ergy Ser­vices sup­ports re­plac­ing the cur­rent re­gional set-up with one na­tional charge across Great Bri­tain and has pre­vi­ously made the case for na­tional pric­ing.

An Ofgem spokesper­son said: “Net­work com­pa­nies face dif­fer­ent costs for serv­ing cus­tomers in GB re­gions, for both gas and elec­tric­ity.

“Li­censed net­work op­er­a­tors re­cover their al­lowed rev­enues, set by Ofgem un­der the price con­trol ar­range­ments, from cus­tomers lo­cated within their li­censed ar­eas (in many cases via sup­pli­ers).

“This is a rea­son­able way to al­lo­cate these costs be­tween cus­tomers.

“Ul­ti­mately it would be for gov­ern­ment to de­cide if changes should be made. Typ­i­cal net­work costs are around 25% (about £250) of over­all en­ergy bills.”

A Gov­ern­ment spokesman said it is for Mr Hendry’s en­ergy com­mit­tee to rec­om­mend change, and their pro­posal would then make its way through Par­lia­ment. Reg­u­la­tor Ofgem has a statu­tory role in pro­tect­ing vul­ner­a­ble con­sumers.

It has a par­tic­u­lar role to play in re­gions across the UK where there is a higher risk of fuel poverty, such as the High­lands.

Ofgem said the north of Scot­land net­work op­er­a­tor re­ceives a cross-sub­sidy through the Hy­dro Ben­e­fit Re­place­ment Scheme, so cus­tomers face lower net­work charges than they oth­er­wise would.

This sub­sidy is not met di­rectly from the hy­dro op­er­a­tors but is re­cov­ered from sup­pli­ers across Bri­tain through a charge added to all units of elec­tric­ity.

The cross-sub­sidy is around £41 per year per house­hold in north Scot­land.

For non-gas house­holds, the Fuel Poverty Net­work Ex­ten­sion Scheme of­fers fund­ing to­wards the cost of con­nect­ing to the gas net­work.

Be­tween 2016 and 2021 gas dis­tri­bu­tion com­pa­nies will have to de­liver 18% more of these con­nec­tions across the coun­try.

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