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Scottish Trading Arrangements

Submission from UNISONScotland

1. As stated in our previous submissions on this issue UNISON Scotland remains unconvinced that a case has been made for radical reform of the Scottish Trading Arrangements. The electricity industry in Scotland is fundamentally different to England and Wales and we believe our structure is inherently more efficient and in the best interests of the consumer and the Scottish economy.

2. Despite the lengthy explanations justifying reform in Ofgem publications, one argument is continually repeated. Namely that this proposal would be compatible with the arrangements in England and Wales. It therefore appears that the primary aim of Ofgem, irrespective of the merits of the case, is to bring Scotland into line with England and Wales. This type of justification in any area of public policy is bitterly resented in Scotland.

3. We have previously commented on the issue of interconnector access and the disincentives for future investment the Ofgem approach creates. Whatever charging arrangements are agreed we believe they must reflect the true costs to the Scottish transmission companies. It is not the function of hard pressed Scottish electricity companies to subsidise competitors from south of the border.

4. Our primary interest in this paper is the establishment of the Scottish System Operator (SSO) and the staffing implications for our members in Scottish Power, Scottish & Southern Energy and SESL who could be affected by this proposal. UNISON Scotland does not believe that a case has been made for the establishment of a separate SSO. No evidence has been produced of bias or lack of transparency and efficiency in the current arrangements. In addition there does not appear to be any proposals for an equivalent arrangement south of the border with NGC. We believe that the internal business separation model already in place for the transmission businesses would be the least worse and most cost effective option. Setting up duplicated support sections, equipment, software etc. is simply an additional cost which will have to be paid for by the consumer.

5. Our main concern relates to the staffing proposals which we believe are both unreasonable and unworkable. In particular:


· Staff moving to the SSO from a current licensee will have contributed to Sharesave (or similar) schemes. Who will compensate staff the current and future loss if they are unable to hold shares in these companies?

· The proposed restrictive covenants on staff moving back to SP or SSE are unreasonable (and possibly unlawful) as in most cases this is their only career development path in Scotland.

· Whilst staff would be probably be covered by TUPE this does not at present cover their pension arrangements. How will such a small joint venture company be able to provide equivalent pension provision to ensure that staff do not lose the full value of previous contributions.

· There are several other benefits staff enjoy by being part of a large company operating in their chosen career area which would also be lost if the degree of separation proposed was introduced.

· How are new staff to be attracted to the SSO when they are entering what will in effect be a career dead end?

6. In essence we believe much greater consideration needs to be given to these issues including meaningful consultation with the staff and their trade unions.

7. Ofgem is normally unwilling to intervene in the (often substantial and almost always detrimental) staffing consequences of its decisions. UNISON has consistently argued that Ofgem should recognise the economic and staffing impact of regulatory decisions. Is this a shift in direction or an isolated foray?

8. In conclusion UNISON Scotland believes that no evidence has been presented to justify the proposed Scottish Trading Arrangements or the establishment of an SSO isolated from the industry. In particular we are concerned over the staffing implications of the SSO for existing and future staff and would urge further detailed consultation on this issue.

Dave Watson
UNISON Scottish Organiser (Utilities)
7 June 2000

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