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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 electricity system.

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 issues.

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!

Scottish Economy

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.

Energy Policy

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 way ahead.

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 poverty.

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