A move to cut energy bills in the North of Scotland and Islands was passed by Scottish Liberal Democrats at the party’s spring conference on Friday (26/02).
The move comes as consumers across the North of Scotland and Islands continue to pay, according to analysis by energy regulator Ofgem, an £86 extra for power each year because of a 2p-per-unit surcharge.
Some campaigners, including the Western Isles Fuel Poverty Action group, have claimed the annual cost of the 2p-per-unit surcharge to be upwards of £300.
The higher costs in the North of Scotland and Islands is a result of the nature of the extra costs of maintaining the extensive network that serves remote and island communities.
In a bid to end what Mr McArthur’s party has described as “a penalty on communities in the North of Scotland and Islands” the party conference called for a “flattened out” national approach to pricing for network distribution costs. This would mean every community in the United Kingdom pays the same amount.
Orkney’s MSP says the move would cut energy bills across the North of Scotland and Islands, including Orkney. He further argues it would bring an end to regional tariff complexities.
Speaking after the conference overwhelmingly backed the proposals, Orkney MSP Liam McArthur said:
“The Liberal Democrats took important strides in government to help keep energy prices in the North of Scotland down but there is much more that needs to be done and this policy is an important first step.
“Orkney, and communities across the North of Scotland, make a substantial contribution to producing the energy that we use in Scotland. Indeed, we have the potential to create even more through our rich renewable resources. It is all the more galling therefore for people in the islands and North of Scotland to find they are paying over the odds for their electricity.
“Energy bills have gone up dramatically over recent years despite the fact that the amount of electricity we are using falling significantly. Many people are still facing an impossible choice between keeping the lights on and feeding their families. This needs to end.
“No matter where you are in the United Kingdom postal stamps cost the same. So should electricity, and that is what ‘socialising’ network distribution costs across the UK would achieve. It will also end the unfairness of the 2p-per-unit surcharge and do a great deal to tackle fuel poverty in rural and island communities.”
Please see conference motion SC1 below.
A fair deal for delivery of essential services
- Consumers across the North of Scotland and Islands currently pay up to 2p per unit more for the delivery of electricity to their homes than those in the cheapest parts of the country, despite the North of Scotland contributing vastly to electricity generation.
- Analysis by energy regulator Ofgem suggests that this 2p surcharge equates to an annual cost of £86 for a typical ‘off gas grid’ consumer with all-electric heating.
- As Ofgem’s analysis assumes consistent levels of energy usage across the whole country and takes no account of differences in weather or the accessibility of energy efficiency improvements for many rural homes, the true surplus cost to many fuel poor households in the North of Scotland and Islands is likely to be significantly higher.
- The reason for higher distribution costs in the North of Scotland and Islands is the extra cost of maintaining the extensive network that serves remote and island communities. These costs cannot be avoided without unacceptable impact on what is a lifeline universal service.
- The welcome trend towards electrification of heat and transport will reduce reliance on fossil fuels but make electricity an even more critical service and a growing proportion of total household energy bills.
- A strong coalition including the Press and Journal, the Western Isles Fuel Poverty Action Group and major energy company SSE are already campaigning for national electricity distribution charge flattening, which would lower bills in the north of Scotland while creating a fairer and more transparent market for all consumers.
- Liberal Democrats believe no one should be enslaved by poverty. Liberal Democrats should therefore seek to eradicate the estimated 101,500 homes (46.7%) across the North of Scotland and Islands that suffer from the highest fuel poverty. Reducing cost of unfair electricity bills is one such way.
- Essential universal services such as the delivery of electricity, telecommunications and post should not be subject to locational variations in charging.
- The removal of geographic variations in delivery charges for essential services would result in simpler, fairer and more competitive markets with potential benefits to consumers all over the country.
- Regulation of essential service provision should encourage competition that works for all consumers and that suppliers are not able to cherry-pick cheaper to serve areas in a way that harms those seeking to provide an affordable service to all.
- Universal charging for electricity distribution could be implemented with minimal disruption to existing arrangements by aggregating the existing costs incurred by electricity network operators centrally to determine a level national price. Regional variations in cost could still be published alongside other indicators of performance in an accessible form to strengthen the accountability of network operators.
- To work alongside campaigners in the North of Scotland and Islands, other affected parts of the UK and consumer organisations in support of a flattened electricity distribution price.
- To call on the UK Government to maintain the Hydro Benefit Replacement Scheme and immediately bring forward the introduction of a cross-GB cost recovery mechanism for Shetland’s separate distribution network.
- To call upon the Scottish Government and all major energy companies to state their position and work with Ofgem and the UK Government in campaigning for action.
- To make the case for equivalent reforms, where required, to ensure a high quality universal service can be delivered to all consumers via the UK postal and telecommunications markets, including fast broadband and the delivery of goods purchased via internet or telephone.
- To make the design of fair market arrangements to secure a high quality universal service in the provision of essential services a key plank of Liberal Democrat policy for the 2019 European Elections and a core principle of the harmonisation of market arrangements across Europe.