Opinion: Pooling and Sharing – the myth of the National Grid

How carbon capture would work in the North Sea.
Source: Scottish Centre for Carbon Storage
How carbon capture would work in the North Sea. Source: Scottish Centre for Carbon Storage
Opinion by Energy Voice

Charges are set on a geographical basis and everyone pays more in the Highlands and Islands.

Pooling and sharing was one of the prime bits of propaganda used to persuade Scots to vote against independence.

The concept being promoted was, of course, that by pooling our “resources” and “sharing” their benefits everyone across the entire United Kingdom would be better off and equality would prevail. In short, we all belong to one big happy family and will be treated equally regardless of where in the British Isles we actually reside.

This is, of course, fatuous nonsense. There is no room for egalitarianism in Westminster’s neoliberal economic world where the market is all. But sadly, an awful lot of people fell into the trap.

We know this because when it comes to things such as the generation and distribution of electricity we depend on the national grid which is managed by a privatised company called National Grid Plc.

It owns the English and Welsh networks whereas in Scotland the southern and central section is owned and maintained by SP Energy Networks, a subsidiary of the Spanish-owned Scottish Power, and the northern section is owned by SSE.

However, National Grid plc remains the System Operator for the whole UK Grid although the charges for using it are levied by another company called the National Grid Electricity Transmission plc (NGET) with costs being split between the generators and consumers.

Charges are set on a geographical basis and this is where the point of having a national grid and all that guff about pooling and sharing fades into corporate oblivion.

Why? Because at some point a delusional twerp or boardroom full of twerps decided it would be a clever idea if generators further away from the highest consumption areas pay more for the privilege of being connected to the grid and that consumers connected to the further reaches of the grid should also pay more. They probably decided this snug in their offices in central London.

In practice this has meant that because demand is higher in the south of the UK than in the north then generators in the north pay more for their connections than those who are – for example – close to London or the Dark Star as it’s now known in my household.

In fact, generators close to London actually receive a fee for maintaining their grid connection whereas Scotland’s Longannet power station has to cough up £40million! I think that’s the reverse of “lovebombing”!

As was mentioned in the media recently, in 2009, generators in the south of England were being subsidised by about £7 per kilowatt hour while those in the Highlands were paying around £22/kW for their grid connection.

The same applies, of course, to clean energy projects such as wind and tidal generation. Those in the south will get a better deal than those in Scotland even though Scotland happens to have more of those resources.

In fact, those proposing renewable energy projects for the west coast islands of Scotland were told that it would cost them £96 per kilowatt hour to get connected to the grid although such an offer was pretty irrelevant given the lack of an interconnector to the mainland and no plans to install one.

As far as consumers are concerned then the situation is equally ludicrous. In Scotland’s Highlands and Islands consumers pay 2p a unit more than consumers elsewhere in Scotland. That’s getting on for 10%.

The main flaw in the system of charging was the decision to set up 14 different regions across the grid all of which have different price regimes but this is not, of course, how the grid was actually intended to work.

If you think about it logically the prime objective of building a national grid should be to ensure that electricity could be made available to everybody and resources such as hydro or wind generation in Scotland could be of benefit to the entire nation and that charges – wherever you live – should be the same.

Sadly though that doesn’t conform to the peculiar version of capitalism we now operate in this ever increasingly unequal “nation”.

All that said, some progress is being made. After efforts by the Scottish Government both at home and within the EU in 2010 the regulator Ofgem finally decided to set up a review on “electricity transmission charging and associated connection arrangements”.

That report was issued earlier this year and although Ofgem has said it will now take into account all the various types of generation, it says this will only reduce but not eliminate the “locational” price disadvantages suffered by projects in the Highlands and Islands and elsewhere on the periphery of the grid and in any event no changes will be brought in until 2016.

Don’t anyone ever try to tell me again that Ofgem is on our side.

As to consumer charges then this issue is being looked at by the relatively newly created Competition and Markets Authority, although it is not clear when its report will be published or whether said body is likely to recommend any changes to the charging regime.

However, any organisation that takes more than 30 seconds to decide it should demand differences in charges dependent on where you live should be scrapped doesn’t fill me with confidence that this is what the CMA actually intends to do.

To my mind location pricing for both generation and consumption should tell us an awful lot about how the UK has changed and not for the better.

It’s bad enough that an asset like our national grid is in private hands but it is really quite atrocious that government isn’t making sure that we all benefit equally from it. It is after all a monopoly. The grid has no competition despite competition being this and every government’s mantra since the 80s.

Pooling and sharing was one of the prime bits of propaganda used to persuade Scots to vote against independence.

The concept being promoted was, of course, that by pooling our “resources” and “sharing” their benefits everyone across the entire United Kingdom would be better off and equality would prevail. In short, we all belong to one big happy family and will be treated equally regardless of where in the British Isles we actually reside.

This is, of course, fatuous nonsense. There is no room for egalitarianism in Westminster’s neoliberal economic world where the market is all. But sadly, an awful lot of people fell into the trap.

We know this because when it comes to things such as the generation and distribution of electricity we depend on the national grid which is managed by a privatised company called National Grid Plc.

It owns the English and Welsh networks whereas in Scotland the southern and central section is owned and maintained by SP Energy Networks, a subsidiary of the Spanish-owned Scottish Power, and the northern section is owned by SSE.

However, National Grid plc remains the System Operator for the whole UK Grid although the charges for using it are levied by another company called the National Grid Electricity Transmission plc (NGET) with costs being split between the generators and consumers.

Charges are set on a geographical basis and this is where the point of having a national grid and all that guff about pooling and sharing fades into corporate oblivion.

Why? Because at some point a delusional twerp or boardroom full of twerps decided it would be a clever idea if generators further away from the highest consumption areas pay more for the privilege of being connected to the grid and that consumers connected to the further reaches of the grid should also pay more. They probably decided this snug in their offices in central London.

In practice this has meant that because demand is higher in the south of the UK than in the north then generators in the north pay more for their connections than those who are – for example – close to London or the Dark Star as it’s now known in my household.

In fact, generators close to London actually receive a fee for maintaining their grid connection whereas Scotland’s Longannet power station has to cough up £40million! I think that’s the reverse of “lovebombing”!

As was mentioned in the media recently, in 2009, generators in the south of England were being subsidised by about £7 per kilowatt hour while those in the Highlands were paying around £22/kW for their grid connection.

The same applies, of course, to clean energy projects such as wind and tidal generation. Those in the south will get a better deal than those in Scotland even though Scotland happens to have more of those resources.

In fact, those proposing renewable energy projects for the west coast islands of Scotland were told that it would cost them £96 per kilowatt hour to get connected to the grid although such an offer was pretty irrelevant given the lack of an interconnector to the mainland and no plans to install one.

As far as consumers are concerned then the situation is equally ludicrous. In Scotland’s Highlands and Islands consumers pay 2p a unit more than consumers elsewhere in Scotland. That’s getting on for 10%.

The main flaw in the system of charging was the decision to set up 14 different regions across the grid all of which have different price regimes but this is not, of course, how the grid was actually intended to work.

If you think about it logically the prime objective of building a national grid should be to ensure that electricity could be made available to everybody and resources such as hydro or wind generation in Scotland could be of benefit to the entire nation and that charges – wherever you live – should be the same.

Sadly though that doesn’t conform to the peculiar version of capitalism we now operate in this ever increasingly unequal “nation”.

All that said, some progress is being made. After efforts by the Scottish Government both at home and within the EU in 2010 the regulator Ofgem finally decided to set up a review on “electricity transmission charging and associated connection arrangements”.

That report was issued earlier this year and although Ofgem has said it will now take into account all the various types of generation, it says this will only reduce but not eliminate the “locational” price disadvantages suffered by projects in the Highlands and Islands and elsewhere on the periphery of the grid and in any event no changes will be brought in until 2016.

Don’t anyone ever try to tell me again that Ofgem is on our side.

As to consumer charges then this issue is being looked at by the relatively newly created Competition and Markets Authority, although it is not clear when its report will be published or whether said body is likely to recommend any changes to the charging regime.

However, any organisation that takes more than 30 seconds to decide it should demand differences in charges dependent on where you live should be scrapped doesn’t fill me with confidence that this is what the CMA actually intends to do.

To my mind location pricing for both generation and consumption should tell us an awful lot about how the UK has changed and not for the better.

It’s bad enough that an asset like our national grid is in private hands but it is really quite atrocious that government isn’t making sure that we all benefit equally from it. It is after all a monopoly. The grid has no competition despite competition being this and every government’s mantra since the 80s.

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