Transmission-charge reform could boost Scots generators

A REVIEW into the National Grid's policy on electricity transmission charges could spark a major reform of the structure and result in a significant drop in payments by Scottish companies.

Ofgem, the energy watchdog, is to launch a consultation into the tiered charging system, which has previously been branded as "discrimination" against developers of power plants based in Scotland.

Under current regulations, remote plants which are further away from the grid's "hub" in the south of England, are forced to pay as much as 25 per kilowatt more than their southern English counterparts to have the energy they create linked up to the national network.

The regulator will today publish an open letter asking for submissions from power companies, politicians and lobby groups to create a full picture of how the charging system could be structured in the future.

Recommendations, which are to be published in spring next year, could result in reforms ranging from the introduction of a flat charge to be paid by all energy firms, regardless of their location - to less extreme reform such as a change in charging boundaries and a smaller differential between areas.

Ofgem chief executive Alistair Buchanan told The Scotsman that a reform would remove any obstacles from the development of renewable energy industry in Scotland.

"If what the companies have been telling us is true, then major changes could mean more megawatts or even gigawatts of extra power generation for Scotland," he said.

But he added that there had been "no firm evidence" so far that higher charges north of the Border had deterred any companies from creating renewable energy projects in Scotland. Higher charges also apply for other remote areas of the UK, such as Wales.

"I want this review to be as open as possible to gauge the opinion of all those involved."