News / Views sought on local energy costs
SUPPLYING electricity to Shetland’s 13,500 households and businesses at near mainland prices cost an extra £26.6 million in subsidies last financial year.
That would amount to an additional £2,000 per local electricity bill were the extra cost not spread between consumers throughout the north of Scotland.
The eye-catching figure is contained in an Ofgem consultation document that seeks views on how energy in the isles could be produced more competitively.
Earlier this year, the energy regulator put a temporary stop on plans by Scottish and Southern Energy to build a new 120 megawatt power station at Lerwick’s Rova Head.
The plans had previously received formal approval from Shetland Islands Council as well as Scottish energy minister Fergus Ewing.
The regulator, however, said the developer had not done enough to prove that its project was the “most cost efficient energy solution for Shetland”.
As a consequence, it now looks as though Lerwick’s ageing power station will have to keep going until 2019 while an “enduring energy solution is procured and commissioned”.
The power station, built in 1953 and run on heavy fuel, currently provides 52 per cent of local demand. The remainder comes from the Sullom Voe gas fired power station (41 per cent) and local wind turbines.
Ofgem is currently seeking views on proposals that would ensure better “value for consumers’ money”.
At present, the £26.6 million is spread to all of SSE’s customers in the north of Scotland, amounting to an extra £19 on annual bills.
And under plans, announced by David Cameron when visiting Shetland in July, that extra cost would be recovered from all UK customers as of April 2015 – reducing the cross subsidy to just pennies per household.
But Ofgem insists that changes “to Shetland’s recovery arrangements are necessary to ensure the costs of the cross subsidy are minimised whilst maintaining security of supply on Shetland”.
The consultation is open until 7 November. The hugely technical consultation document can be found here.
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