Scots power firms avoid £100m charge for 'balancing'

Published on Tuesday 2 March 2010 21:50

ENERGY industry watchdog Ofgem has scrapped plans to increase charges faced by Scottish power companies to access the electricity grid.

Generators in Scotland had warned the plans to increase their "balancing charges" could have seen them pay up to 100 million more each year.

Along with the threat of increased transmission charges – the charge to actually transmit electricity through the grid – this has been opposed by the Scottish Government.

Now, after strong opposition, Ofgem has announced in a letter that it has abandoned the plans.

The charges are paid by power companies to cover the cost of paying compensation, known as "constraints" when the grid is too full for generators to transmit electricity.

Currently, they are paid equally by power companies across the country. However, under the plans, Scottish generators would have paid more.

Energy minister Jim Mather said: "The decision to drop the proposal to target the costs of managing grid constraints at Scottish generators is welcome evidence that Ofgem and others are listening and realise that renewable generation in Scotland should not be penalised."

Niall Stuart, chief executive of Scottish Renewables, said: "The industry is breathing a sigh of relief."

However, a spokesman for Ofgem said they were still convinced there needed to be a "locational" element to the charges.

"There may be a possibility in the future that this would come back around," he said.