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Energy: Fees and Charges

Volume 472: debated on Monday 3 March 2008

To ask the Secretary of State for Environment, Food and Rural Affairs what plans he has to cap transmission charges if Ofgem implements a new payment system based on generator distance from population centres. (189446)

I have been asked to reply.

In the GB electricity market, Transmission Network Use of System Charges (TNUOS) are already charged on a cost-reflective locational basis, such that generators furthest from centres of demand pay a higher charge to reflect the additional transmission network costs. Ofgem are considering whether such arrangements should also apply to transmission loss charges, which currently do not vary by location.

The Government has no intention of capping these charges for the generality of users. However, section 185 of the Electricity Act 2004 gives the Secretary of State the power to adjust such charges in an area which has high potential for the development of renewable generation and where the charges would otherwise be a material hindrance to that development. The Government has said that it intends to exercise this power for the Scottish islands, subject to the statutory tests set out in section 185 being met. In particular, the Government would need to be satisfied that the level of transmission charges in the absence of a scheme constitutes a material hindrance to the development of renewable generation in those locations.