Question

To ask the Secretary of State for Energy and Climate Change, pursuant to the Answers of 6 July 2015 to Question 4511 and 12 October 2015 to Question 10567, if she will request that OFGEM explain what its justification is for allowing a higher charge for supply in the north of Scotland.

Electricity supplied to consumers in the North of Scotland region is produced by a range of generation types traded in a competitive market across GB. The electricity price paid by consumers in any given region is not therefore determined by the predominant generation type in that region.

Ofgem does not regulate energy prices - these are set by energy suppliers in competition with each other and so matters relating to the pricing of tariffs are a matter for each individual company.

Ofgem addressed the differences in electricity charges between regions at paragraph 2.5 of their recent report on ‘Regional Differences in Network Charges’. This stated that the differences observed are not a ‘surcharge’, but reflect the different network costs in the region when shared out between customers consuming energy in that area. They also saw “no compelling case” to change these arrangements, from a regulatory perspective.

The report also noted that electricity distribution charges in the north of Scotland are already cross-subsidised to an extent through the Government’s Hydro Benefit Replacement Scheme. It is currently worth around £41 per annum per household in the north of Scotland, and means that consumers face lower network charges than they otherwise would.

This report can be obtained at:

https://www.ofgem.gov.uk/publications-and-updates/ofgem-report-regional-differences-network-charges.