Yes vote 'threatens bill subsidy'

Mar 1 2013

A vote for independence could see energy bills in the north of Scotland rise by over £30 a year, the UK Energy Secretary has suggested.

A UK Government subsidy which cushions the north of Scotland from high energy bills is under review but is likely to continue, Ed Davey announced.

Customers in Scotland will continue to receive money from the hydro benefit replacement scheme if they vote No to independence, he suggested.

It costs energy companies more money to transmit to remote areas. The scheme subsidises people in these areas to keep their energy bills down. A second law, called the common tariff obligation, prohibits energy firms from discriminating against the most remote people in the north of Scotland by charging them even higher rates.

Both schemes are up for review this year and the Department of Energy and Climate Change has issued a call for comments on the review, but Mr Davey said they are likely to continue. The subsidy is funded by energy customers, and is said to cost the average UK household less than £1 a year.

The scheme is said to save a total of £50 million on energy bills across the north of Scotland. Around a third of this amount contributes to an average bill saving of £31 a year to 690,000 domestic customers in the north of Scotland, with the rest giving bill savings to the 70,000 non-domestic consumers.

Mr Davey said: "This scheme is another example of how Scotland currently benefits from being part of the United Kingdom, providing an average annual saving of £31 to 690,000 domestic consumers in the north of Scotland.

"With the size of the Great Britain consumer base, we are able to spread the cost of protecting consumers in the north of Scotland. I believe wholeheartedly that Scotland is stronger as part of the UK, and that the UK is stronger with Scotland in it."

UK Energy Minister John Hayes said: "This scheme cushions consumers in the north of Scotland from the high costs of distributing electricity over a sparsely populated area. It shows that as one nation with a shared energy market, the British are stronger together. We are proposing to retain this scheme so that consumers in the north of Scotland will continue to receive this discount."

This announcement comes as Mr Davey visits Aberdeen. He will call on Talisman Energy and ROVOP which makes underwater vehicles for the oil and gas and offshore renewables sector.