Salmond - a new low and an epic fail

The Hootsmon reported yesterday on the Fat Minister's New Year message to his grateful and attentive nation.

"In it, the First Minister focuses specifically on the controversy over high transmission charges for renewables firms in Scotland. As they are based further away from the UK's main centres of population, they are charged more for access to the National Grid. Mr Salmond said the charges were "totally unfair and totally unacceptable"."

It says something about the abject and humiliating failure of his governmental programme that he has to focus one of his most important messages of the year on, er, electricity transmission charges.

It also demonstrates what an opportunist and ignoramus he is - both at the same time, which is pretty impressive!

Let us - as is my wont - look at the facts.

We can find the data on these fascinating charges here on National Grid's website.

And we can indeed see that power stations in Scotland have to pay more to National Grid than elsewhere in the country. In fact, power stations in some parts of Southern England pay negative charges - i.e. National Grid actually pays them for being there.

Why?

Supply and demand.

There is a lot more generation capacity in Scotland than there is demand for power. So for these power stations to actually find a paying customer, their output has to be exported and carried a long way by the Grid. This costs.

In fact, the Grid is having to invest in new transmission lines to carry the output from all the lovely new wind farms that are being built. This costs even more, and the Grid raises the money by charging the power stations that want it to export their power. Seems fair to me.

In Southern England, on the other hand, there is much more demand than generation. So power stations there don't need new infrastructure to be build and don't need their output carrying large distances. In fact it would save the Grid money if more stations were built there. Hence the negative charges.

Locational incentives, see? It would save the Grid - and all of us - money if power stations located themselves in the South of England, close to the centre of demand.

But this is only half the story. In fact it's a lot less than half - more like a quarter. Viz page 11, paragraph 1.5 (v) of the Grid's Charging Methodology Statement:

"v.) The application of a Transmission Network Use of System Revenue split between generation and demand of 27% and 73% respectively."

The Grid actually gets 73% of its use-of-system revenue from demand - i.e. customers like you and me - and only 27% from power stations. (This charge is bundled up inside the tariffs we pay to our electricity suppliers.)

Let's look at the charges for consumers.

Oooh! Aaah! Lo! and behold, the picture for the demand-side charges is exactly the other way round from that for the generation-side charges.

Who'd have thought it?

This means that Scottish consumers pay lower transmission charges than anyone else in the country.

For exactly the same reason National Grid wants to incentivise generation to locate in the South, it would like demand to locate itself in the North. That's good for us consumers personally and directly, and it's good for the Scottish economy since it makes it marginally cheaper for energy-intensive manufacturing industry to locate here.

Isn't it amazing that the much-vaunted "professional economist" of Bute House is unable to grasp this?

It's not as if he hasn't been given the expert answers for a long, long time. Here is the electricity and gas regulator, Sir Alistair Buchanan, in the Hootsmon in August 2008:

"You were inaccurate to describe the methodology behind locational transmission charging as a "special levy" on Scottish generators.

This charging system is applied in the same way on generators throughout the GB network. It fairly reflects the costs that generators impose on the network to get their energy to the end user.

This is because the further a source of gas or electricity is from its end user, the more it costs to transport that energy to them.

There is no evidence that cost reflective transmission costs are somehow harming the generation of renewable energy in Scotland.

There is a substantial queue of renewable generators waiting to connect, many of which are only being held back by the lack of planning consents. We are not aware of any proposed development that has not gone ahead because of network charges."

It ought to be obvious that the amount of money the Grid needs to raise to fund its operations and investments is pretty much fixed. So if Salmond were to get his wish of reduced charges for generators in Scotland, the obvious corollary would be increased charges for consumers in Scotland.

Brilliant! He wants to reduce charges for the big, rich, mostly foreign-owned corporates building wind farms (Iberdrola, RWE, E.on, EdF, and our own Centrica and SSE) and put them up for ordinary consumers. Clearly an example of a consummate master political tactician at work.

Hopefully you can see why I'm calling this a new low for our Fat Minister.

He hasn't got a lot to talk about in his New Year message. No LIT, no meaningful SFT, failure on class sizes and not much worth saying about the doomed "independence" referendum either.

So the only target the portly one can find for his nakedly politicised, opportunist attempt at gripe-and-moan Union-bashing is, er, electricity transmission charges.

Hardly likely to set the heather alight and inspire the Nat grassroots to charge the barricades, is it?

And what makes it, in addition, an epic fail, is that he has either totally misunderstood the facts or (could this be true?) is choosing to misrepresenting them. What he is actually doing is calling for costs to be transferred from big multinational companies to Scottish consumers.

Whichever explanation is true, it demonstrates why this charlatan is totally unfit for his position.

Oh, and Happy New Year.