Question

To ask the Secretary of State for Energy and Climate Change, pursuant to the Answer of 6 July 2015 to Question 4551, if she will request that Ofgem consider whether, given that SSE's cost of generating hydro power is comparatively lower than the cost of a gas-fired plant the additional charges being levied by SSE to maintain supply in the Highlands and Islands is appropriate.

Electricity supplied to consumers in the Highlands and Islands region is produced by a range of generation types traded in a competitive market across GB. The electricity retail price paid by consumers in the Highlands and Islands, or any other given region, is not therefore determined by the predominant generation type in that region.

The particular challenges of electricity supply in the Highlands and Islands – primarily related to the relatively large and sparsely populated terrain – mean that it costs more to distribute electricity here than elsewhere. There are two UK Government schemes which ensure consumers in this region do not bear an unreasonable burden of these costs. The Hydro Benefit Replacement Scheme is providing an assistance amount of £57m in 2015/16 to all consumers in the North of Scotland, which is funded through charges on all licensed electricity suppliers across GB. The Common Tariff Obligation ensures electricity suppliers in the North of Scotland are not able to charge comparable domestic consumers different prices solely on the basis of their location within the region and protects consumers in remote rural areas from the relatively high costs of supplying electricity in these areas.