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Charges for remote generation put on hold
1 October 2007
Renewable generators in remote and windy parts of the UK have won a temporary respite from increased charges for transporting their power to customers. Energy regulator Ofgem had been expected last month to rubber-stamp its earlier "minded-to" decision for an allocation of costs of transmission losses based on distances power travels along the wires. Ofgem has now back-tracked, postponing a decision until the spring. At present, the cost of transmission losses, £260 million a year according to Ofgem, are borne by both generators and electricity retailers. Since June, Ofgem has been gathering views on its proposal to allocate the costs to users of the electricity system based on their location. This would mean that wind generators in the north of Scotland and the Scottish Isles, where the best resources are found, would see their transmission charges rise sharply. Ofgem reasons that locational charging will discourage development of projects likely to suffer high transmission losses in favour of projects closer to centres of population, protecting consumers' financial interests. A range of Scottish interests, from the government to the press, has joined the renewables industry in campaigning against the proposals from London. Ofgem's about-turn comes after criticism that it was over-reliant on an analysis of transmission charges by consultants Oxera. Even Oxera believes Ofgem "had placed more weight than appropriate" on its analysis. The date for introducing the new charges -- originally due to have come into effect on October 1, 2008 -- has also been postponed.
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