BETTA or WORSE?
British Electricity Trading and Transmission Arrangements
The UK energy minister has announced plans to take
Scotland into new UK electricity trading arrangements known as British
Electricity Trading and Transmission Arrangements (BETTA). This
is essentially the English system long favoured by the energy regulator
Ofgem with their well publicised hostility to the integrated Scottish
The justification for this move appears to be based
on a description of the electricity market in Scotland which is
unrecognisable by the either the industry or consumers. We already
have a competitive market in Scotland closely linked to the New
Electricity Trading Arrangements (NETA) which apply south of the
border. This means wholesale prices are essentially the same both
sides of the border. It is distribution, transmission and metering
costs that account for any difference in price and that is due to
geographic and demographic factors. BETTA has no impact on these
In the real world, customers in Scotland (as in
the rest of the UK) regularly switch suppliers. For example Ofgem's
figures show that a third of ScottishPower's electricity customers
have switched and many others switch and return on a regular basis.
Despite this 'competition' most customers wish they hadn't bothered.
Ministers would do well to ask real customers if they think the
competitive market is working. UNISON members deal with thousands
of calls every day from confused customers. These customers are
bombarded with a bewildering array of marketing ploys and often
end up unsure who is providing their energy and without a bill for
months. All of these systems and the regulatory empire developed
by Ofgem is costing a fortune. Money that would be better spent
on Scotland's crumbling utility infrastructure.
And there are other losers. Disadvantaged customers
have been abandoned as all the companies seek to cherry pick the
affluent direct debit paying customer. Competitive markets do little
for fuel poverty. Twelve years after privatisation fuel poverty
still affects one in three Scottish households.
The Scottish economy is also a loser. Three of
Scotland's top six companies are in the energy business. They have
been forced to incur huge costs separating their businesses into
ever smaller (and uneconomic) units. The only real gainers have
been the logo designers and the sign writers!
The Real UK Market
Whilst Ofgem focuses on the allegedly dominant
position of Scottish electricity companies, in the real UK market
there is the inevitable consolidation into a smaller number of larger
suppliers. Everyone is forced to seek economies of scale to pay
for marketing initiatives and to cut the costs of generation, and
distribution. Scottish companies attempting to gain scale are faced
with unfair competition from European companies who operate in protected
home markets. These companies can afford to pay high prices for
customers and generating capacity when it comes on the market. As
a consequence the UK energy market is rapidly being taken over by
German, French and Italian companies.
Ministers (including the Prime Minister) may bemoan
the actions of our European 'partners' - but in practice have done
very little to create a level playing field across the EU. In fairness
to the Europeans it is hard to blame them for not wanting to impose
on their citizens the shambles wrought by the UK system!
The consequences for Scotland are immense. Our
energy companies are forced to downsize with thousands of quality
jobs disappearing across the sector. UNISON has highlighted huge
job losses in Transco, ScottishPower, British Energy and Scottish
& Southern in the past year. Whilst the Scottish Executive seeks
to switch economic development support from inward investment to
indigenous companies - UK government energy policy drives our companies
overseas. What happened to joined up government?
Scottish companies are switching investment to
North America in the inevitable search for shareholder value. Their
unofficial attitude appears to be that if the government is happy
to hand over the industry to the Europeans, they will go where they
can get a fair return on investment.
It is claimed that BETTA will encourage renewable
generators. How? Scotland needs an energy strategy that provides
positive encouragement to new forms of generation. Market regulation
has been a dismal failure and BETTA is an irrelevance. We believe
UNISON's policy A Scottish Energy Strategy shows a better
BETTA is Worse
The harsh reality is that the endless regulatory
initiatives from Ofgem have been a costly failure. To cover up this
failure they are promoting yet another initiative, BETTA. The integrated
Scottish electricity system has nothing to do with most of the issues
identified by ministers. It is just the latest scapegoat for policy
and regulatory failure.
The time has come to call a halt and bring some
sanity back to Scotland's energy structures. We need a planned energy
policy that provides safe, secure and sustainable generation, which
contributes to the economic future of Scotland and eliminates fuel