Shetland energy network: new plan to save residents’ bills

shetland energy network
© iStock/Marc-Andre_LeTourneux

The UK government has announced plans to save residents of Scotland’s northernmost regions money on their electricity bills.

The Shetland energy network, which serves 23,000 residents, costs £18m (€19.95m) more per year than the UK mainland to provide electricity to businesses and households; with the excess covered by heightened electricity bills for consumers in the North of Scotland. Upgrades to the network set to take place next year mean the additional cost is set to rise to £27m per year; and concern over the burden of rising costs on Northern Scottish consumers has led the government to launch a consultation on a scheme to spread the additional costs across the whole of the UK from April 2020.

Chris Skidmore, the UK’s Minister of State for Energy and Clean Growth, said: “The UK government is committed to ensuring everyone across the country, including in the remotest parts of Northern Scotland, has access to a reliable energy supply at a fair price. We’ve already shown this through our price cap – intervening in the market to protect loyal consumers in all parts of the union from being overcharged. Consumers in the North of Scotland should not have to fund the costs of maintaining Shetland’s energy security alone. The ability to share costs more widely is one of the benefits of being part of the United Kingdom and these plans will mean consumers in the north of Scotland will soon receive a welcome saving on their bills.”

Shetland is the only part of the UK which is unable to benefit from the economies of scale afforded to other regions, as the Shetland energy network is the only part of the UK’s licensed energy distribution network which is fully isolated. The government’s consultation on updates to the ‘Hydro Benefit Replacement Scheme and Common Tariff Obligation’, which could see consumers from Thurso to Aberdeen save around £17 (€18.83) per year on their electricity bills, will run until 6 September 2019.

Scotland Secretary David Mundell said: “I warmly welcome the UK government’s plan to cut the electricity costs of consumers in the North of Scotland. Spreading the costs across the whole of Great Britain reflects the unique circumstances in Shetland and Northern Scotland. ‎The UK government is determined to deliver for all of Scotland’s communities. The UK government’s Hydro Benefit Replacement Scheme already provides an annual cross-subsidy of £61 million to protect electricity consumers in the North of Scotland from the high costs of electricity distribution in the region. It is funded by charges on electricity suppliers across Great Britain.”

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