GB energy market ‘should stay after independence’

An expert commission has recommended that the current energy market be retained if Scotland becomes independent. Picture: TSPL

The Scottish Government established an independent commission to examine energy regulation if the country votes to leave the UK on September 18.

Its report, to be published today, will insist that the continuation of a single energy market for all of Great Britain is the best outcome for both consumers and investors in Scotland, England and Wales.

The commission is also calling for a more radical approach to tackling fuel poverty, with its chair Robert Armour - a former chairman of the Scottish Council for Development and Industry - branding this an “intractable challenge”.

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First Minister Alex Salmond said the commission had produced a “detailed and authoritative report” which recognised that “independence will give Scotland new powers to tackle fuel poverty and reduce the impact of high energy costs and prices”.

The commission said a single energy market could continue to work, even if Scotland left the UK, highlighting successful examples of this in Ireland, Iberia and Scandinavia.

There is broad support across Britain for this, it argued, adding that such a move would be in line with market integration across Europe.

“In the event of independence there are undoubtedly issues that will have to be settled between the two administrations,” Mr Armour said.

“We share a common integrated system and have a common interest in energy security. When those issues are settled all parties need to be confident in the robustness of the arrangements agreed.

“Looking to Europe and beyond we found working models of cross-border partnerships delivering jointly-regulated integrated markets that show single markets can work with goodwill and cooperation.”

‘Single regulator’ call

The commission recommended that in the event of a Yes vote, Scotland should establish a single independent utility regulator, which would be the watchdog body for the electricity, gas and water industries.

On fuel poverty it called for a specialist agency to target assistance, and also recommended the roll out of ‘smart meters’, which can help consumers save money on their electricity bills and offset price increases.

Mr Armour said: “Eradicating fuel poverty has proved an intractable challenge. We believe a more radical approach to tackling fuel poverty is now needed.

“We see an opportunity to improve cost effectiveness and better target delivery to disadvantaged and vulnerable consumers through accessing data already held on social need. In future we will be able to take this approach further using the improved data that will come from the roll out of smart meters.”

Meanwhile Mr Salmond said a “resource rich” Scotland could help the UK meet its renewable energy targets, even if it became independent.

The First Minister said: “The report rightly highlights that independence will open up new possibilities which could better address Scotland’s energy needs, and recognises that it is in our common interest to share energy resources across our borders.

“Scotland is a resource rich country and it offers safe and secure supplies of electricity and gas, and can continue to assist the rest of the UK in meeting its legally-binding renewable energy targets.”

He added: “It’s clear that a strategic energy partnership between our governments after independence represents the best outcome for all concerned and the commission has clearly identified examples from across Europe - in Ireland, Iberia and Scandinavia - which show that this can be done.”

Report welcomed by ‘Yes’ camp

Blair Jenkins, the chief executive of the pro-independence Yes Scotland campaign also welcomed the report, stating: “We have always said that independence will be good not only for Scotland but also for the rest of the UK. Where we can sensibly and practically retain mutually beneficial arrangements, such as maintaining single markets in electricity and gas, of course, this is the best be the way to proceed.

“As the commission points out, combined regulation of single markets already successfully operates between independent countries in other parts of the EU.

“One of the priorities of any government in an independent Scotland will be to tackle the scourge of poverty, including fuel poverty, but only with a Yes vote will be gain all the tools we need to make this happen.”

A spokeswoman for the Department of Energy and Climate Change said: “In the event of Scottish independence, the single market for electricity and gas just could not continue in its current form with Scottish consumers losing out on shared investment in infrastructure, transmission, and renewables.

“Our analysis shows that Scottish consumers are up to £189 better off in the UK as the broad shoulders of the Union allow us to spread energy costs more evenly.”