The locational transmission charging system acts to incentivise the generation of electricity as close as possible to the point of consumption, thus minimising transmission losses and improving efficiency.
The difficulty that this causes for Scottish generators is due to the fact that we over-produce electricity for the local market – we have peak demand of around 5.4 GW but around 11GW of installed capacity.
Much of this excess capacity has come in the form of large onshore wind projects which SNP ministers have deliberately encouraged. Certainly transmission charges need to be kept under review, but already reductions are being delivered by the National Grid which will deliver millions in savings to Scottish generators. And those who argue for a different approach need to consider the impact on consumers.
The SNP’s preferred “postage stamp” model, where generators pay the same regardless of location, would, according to Ofgem, deliver a £7 billion hike in consumers’ bills.
The hardest hit households would be in the north of Scotland, where levels of fuel poverty are already unacceptably high.
I can understand the power companies supporting a massive transfer of wealth from their customers to their own profits, but should the Scottish Government really be on their side?
Murdo Fraser MSP
Scottish Conservative Spokesman on energy
The Scottish Parliament