SSE chief urges move to national pricing

Alistair Phillips-Davies, Chief Executive of energy company SSE, has today [October 23] written to the Secretary of State for Energy and Climate Change, Ed Davey MP, urging his department to consider the merits of a move to ‘national pricing’ on supplier costs.

It follows recent media and political interest, particularly in Scotland, in the fact that all electricity suppliers currently face different costs for transporting electricity in different parts of Great Britain.

SSE has been making the case for some time that it would make sense for these transport costs to be ‘flattened out’, so that there is one standard charge for every customer across Great Britain. Reforms require regulatory change and SSE is keen that this happens as soon as possible.

The letter from SSE has also been sent to Ofgem, the Competition and Markets Authority (CMA) energy market inquiry and Caroline Flint, Shadow Secretary of State for the Labour Party on Energy and Climate Change.

The full letter states:

Dear Secretary of State

A move to ‘national pricing’

You will be aware that in the last few days there has been media and political interest in the fact that all electricity suppliers face different costs for transporting electricity in different parts of Great Britain. As you know this is an area where SSE has been making the case for reform.

I am aware that the reason for regional differences in retail electricity prices is due to different costs for transporting electricity in different parts of Great Britain. The companies operating networks in areas such as Northern Scotland and North Wales are always going to face larger costs per customer because these are large land masses with diverse terrain and remote housing.

Indeed our own networks businesses experience this. The energy suppliers receive the charge from the network companies and pass it on to customers, which leads to overall regional price differences across all suppliers. Whilst some Government interventions narrow the scale of the differentials, as you know they do remain.

Our position on this has been informed by public polling on this issue and the results are clear. Consistently two thirds of people support an end to regional price differentials and we have recently seen in the North of Scotland and the Islands that this is an issue of public concern.

SSE has been making the case for these transportation costs to be ‘flattened out’ to one standard charge for every customer across Great Britain. The network companies would receive the same income for their necessary maintenance and investment work, but the costs would be spread across all regions, resulting in an end to this issue.

This would make things far simpler for customers by reducing tariff complexity, as well as addressing these public concerns. To make these changes requires legislative or regulatory change. I hope that you will consider this issue.