SSE and the independence referendum

Friday, 24 February 2012 23:30

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An analysis by Dave Taylor

Perth based Scottish and Southern Energy has responded to the consultations by the Scottish and UK Governments on Scotland’s independence referendum.

While they insist that no one “should seek to attribute to SSE a view on whether or not Scotland should remain part of the United Kingdom” and that “SSE does not believe it is appropriate for it to have a view on that question, which can only be answered by voters”, their observations will inevitably be used within the constitutional debate.

The energy market is extensively regulated by governments, and SSE are concerned solely with possible changes to the regulatory environment within which they operate.

SSE are keen “that the interconnection and integration of the electricity and gas systems and markets in Scotland and in England and Wales should continue regardless of the outcome of the referendum on Scotland’s future.  This means that there should continue to be a single energy market for the islands of Great Britain, just as there is a single electricity market for the island of Ireland.  Indeed, SSE supports further harmonisation of energy systems and markets to strengthen security of supply and achieve efficient use of energy resources for the benefit of customers.”

Scottish Energy Minister Fergus Ewing welcomed SSE’s submission and added: "We agree with SSE that post-independence we should maintain a single Great Britain energy market, within an increasingly unified single EU market - that has been the policy position of the Scottish government for some time.

Indeed, increased integration of energy markets across the UK and Ireland was agreed at a meeting of the British-Irish Council last summer."

At the British-Irish Council the 8 governments of the British Islands and Ireland agreed: “the All Islands Approach (AIA) vision of an approach to energy resources across the British Islands and Ireland which enables opportunities for commercial generation and transmission, facilitating the cost-effective exploitation of the renewable energy resources available, increasing integration of their markets and improving security of supply. The Council agreed a set of principles to underpin the vision, and launched a programme of joint work spanning the potential for renewable energy trading, as well as workstreams on interconnection and market integration.”

A similar reassurance from Charles Hendry, UK Minister of State for Energy, to SSE would be valuable at this time.

Since inter-state co-operation in a single energy market across the island of Ireland already exists, only an rUK Government could disrupt the single market in the British Islands, or prevent increased regulatory co-operation across both island groups.

SSE had one further concern. “There does not appear to be a consensus on how Scotland’s position with regard to the European Union, which has a major influence over electricity and gas systems and markets in Member States, would be determined.”

The company is correct in this, just as there is no consensus on how rUK’s position would be determined.  However, SSE stress their expertise in managing risks, and will be able to assess the likely risk that the EU would want to exclude its greatest energy producer and/or one of its larger economies.

Of course, it is entirely possible that there was a political motivation for this response to the consultations, since it provides a basis for the Unionist scares of "business uncertainty" and "Europe -who knows"?.