Committee
Economy, Energy and Tourism Committee 09 February 2011
09 Feb 2011 · S3 · Economy, Energy and Tourism Committee
Item of business
Project Transmit
Yes, and we hope to find out from you whether you agree. Some people are for change to the charging mechanisms and some are against. Who are for it and who are against?
In the same item of business
The Convener
LD
I welcome witnesses from the Office of the Gas and Electricity Markets, who are here to give us a briefing and take questions on project transmit, which rela...
Charles Gallacher (Office of the Gas and Electricity Markets)
Thank you. I am director of Scotland, Wales and regions for Ofgem and I act as the interface between Ofgem and the Scottish Parliament, the National Assembly...
The Convener
LD
Does Stuart Cook want to add anything?
Stuart Cook (Office of the Gas and Electricity Markets)
Charles Gallacher has introduced me, so I will just say that it is a pleasure to attend a second meeting of the committee. I was here a year or so ago when t...
The Convener
LD
Perhaps you could start by talking about where we are in the process and what the timescale is for completing the project.
Stuart Cook
I am happy to do that. The best way to think about transmit is as a project that comprises four elements, which we are progressing in parallel.The first elem...
The Convener
LD
I appreciate that you are halfway through the operation that you are undertaking, so you might be unable to answer fully some of our questions—you can say if...
Stuart Cook
You are right to point to the Western Isles situation, which is complicated. It is clear that a combination of the connection arrangements and the charging a...
The Convener
LD
The question that strikes me is why, if the current charging regime is based on being close to the market, people receive a subsidy for connecting in Cornwal...
Stuart Cook
That is a good example of how the regime operates and an interesting example to bring to my attention.I accept that we have questions about whether principle...
Rob Gibson (Highlands and Islands) (SNP)
SNP
If the UK market that Ofgem serves were a nice circular ball there would be no problems, but our geography is long and narrow. How can it be fair to construc...
Stuart Cook
That is the question that we need to tease out as part of the review.
Rob Gibson
SNP
That has been happening since the 1980s.
Stuart Cook
The 1980s regime was established with the particular intention of protecting customers by minimising the risk of investment in the system when it could be pu...
Rob Gibson
SNP
Yes, and we hope to find out from you whether you agree. Some people are for change to the charging mechanisms and some are against. Who are for it and who a...
Stuart Cook
There is a geographical dimension to the fors and againsts—it would be wrong of me to suggest otherwise—but it is not universal; some of the cross-country re...
Rob Gibson
SNP
Indeed. So it comes down to whether we are one market. If people who are part of the geographic market are constrained, the market cannot be fair. We do not ...
Stuart Cook
What we need to do will have to be done carefully, because any change to the regime will have implications for lots of different people. We need to understan...
Rob Gibson
SNP
You said that the flow of electricity goes primarily from the north to the south. That suggests that, if there is one market, there would be severe problems ...
Stuart Cook
A lot of investment is going on at the moment—I think that that is what you are asking about. In the past three or four years, we have authorised £1 billion-...
Rob Gibson
SNP
I understand that and it is welcome; I am trying to point out that there must be constraints in the grid in England for exporting north.
Stuart Cook
That is true.
Rob Gibson
SNP
That has been the case since the 1980s. We have not had a level playing field in terms of the possibility of accepting electricity wherever it is produced, w...
Stuart Cook
It is true that there are constraints going north. It is also true that they do not bite as often as do the constraints going down south.
Rob Gibson
SNP
Indeed.
Lewis Macdonald (Aberdeen Central) (Lab)
Lab
You mentioned the impact on customers. Your review is intended to consider whether the system is fit for purpose in terms of promoting the right kinds of gen...
Stuart Cook
That is an interesting question. The work of the academics is making an important contribution to the exercise but, as you would expect, we will not rely who...
Charles Gallacher
The committee is probably aware that Ofgem is in the middle of a major review of the retail market, which is due to be published by the end of this month. We...
Lewis Macdonald
Lab
Stuart Cook, you mentioned that you had concerns that the reflectivity of supply and demand was not working in quite the way that the model suggests it ought...
Stuart Cook
You can see that very difference when you look at the charges. To take an example that has already been cited by a committee member, I point out that a deman...