Fees charged for applications under the Electricity Act 1989 consultation: our response

1. Introduction

1.1 This document sets out the Scottish Government’s response to the consultation on revising fees for processing applications under the Electricity Act 1989. It details the conclusions Ministers have reached and the changes which will be implemented. We have carefully considered all comments received throughout the consultation process. An analysis of these comments has been carried out, which is published in a separate document entitled “Fees Charged for Applications under the Act – Analysis of Consultation Responses” (subsequently referred to as the “analysis report”). The analysis report should be read alongside this document.

1.2 The Scottish Public Finance Manual sets out that the standard approach to setting out charges for public services should be full cost recovery. Our income from fees charged for applications under the Electricity Act 1989 has consistently fallen short of the costs of providing the service of determining such applications, which is incompatible with the standard approach to setting charges for public services.

1.3 While we are respecting the aims of the Scottish Public Finance Manual (SPFM), we are purposefully supporting high priority investment in low carbon generation while making sure we are adequately resourced to deliver an appropriate level of service that contributes to the delivery of the Energy Strategy.

1.4 We have reviewed the fees that we charge and the Scottish Government’s conclusions and changes to be implemented are summarised below at paragraphs 1.5 to 1.12. We estimate the cost to the low carbon electricity generation business sector in Scotland would be less than 0.05% of its annual turnover^[1]. Our fees will be closely aligned with the equivalent fees paid under local planning, for example, a 51MW wind farm will require a fee no greater than a 50MW wind farm would under the Town and Country Planning (Scotland) Act 1997.

1.5 A balance has been struck between the policy objectives of the Energy Strategy and the aims of public finance management given by the Scottish Public Finance Manual. Fees shall be revised in manner which takes account of the comments received through the consultation.

1.6 Upfront cost for the pre-application and scoping stages shall not be implemented at this time. Therefore there will be no phasing of a proportion of application fees to EIA screening and scoping stages.

1.7 We will implement a fee lower than those which were consulted on for applications to construct or extend a generating station, and revise the categories and thresholds. The thresholds for the existing 100 – 200 MW fee band will be extended to include applications up to 300 MW, and the thresholds for the existing 200 – 500 MW band will be revised such that this band applies to all applications over 300 MW. There will no longer be a higher band for applications over 500 MW. A fee shall be introduced for applications for variation under section 36C of the Act, at a rate lower than proposed by the consultation. Section 6 should be referred to for details of the relevant fee levels to be implemented.

1.8 Although separate from the arrangements for the charging of fees, the voluntary remuneration to planning authorities in relation to onshore applications shall be greater than proposed in the consultation to take account of comments from Planning Authorities and developers. Consultation responses acknowledged the contribution that Planning Authorities make, as a statutory consultee in the Electricity Act consenting process, in progressing those applications to determination. Following implementation of the revised fees, the Scottish Government will provide a voluntary contribution to Planning Authorities equivalent to one half of the fee received for every application for onshore electricity generation development under section 36 and 36C of the Act for which the revised fee has been paid. Ministers will also implement a voluntary contribution to Planning Authorities of one half of the revised application fee for EIA development applications under section 37 of the Act for which the revised fee has been paid.

1.9 The service improvements include responding to demands to more proactively project manage application processes to deliver greater certainty around determination timescales. We intend to continue to support discussion with a range of consultees during the assessment of the application, and at pre-application stage to limit the incidence and scope where additional information has to be sought from applicants.

1.10 A fixed fee structure for Section 37 applications based on installed capacity or length of overhead lines shall be maintained, but with revisions to the bands, thresholds and fee categories, with caps on the fees in recognition of the industry’s concerns regarding disproportionate increases for small-scale or very large developments.

1.11 The revised fees will be implemented by amendment of the Electricity (Applications for Consent) Regulations 1990. This would be subject to a negative procedure in the Scottish Parliament. Ministers aim to implement the revised fees from May 2019.

1.12 Following the implementation of the revised fee levels the Energy Consents Unit shall monitor the effects of the changes.

Overview of consultation

1.13 Fees charged for applications under the Electricity Act 1989 (“the Act”) are currently set by the Electricity (Applications for Consent) Regulations 1990 and include the following:

Under section 36 of the Act:

• Construction or construction and operation of a generating station
• Extension or extension and operation of a generating station
  • Resulting in an increase in capacity
  • By retrofitting of emission control equipment to a nuclear generating station
  • Any other extension of a generating station
• Operation only or change to manner of operation of a generating station

Under section 37 of the Act:

• Overhead electric lines

1.14 A consultation proposing revisions to fees for the above and the introduction of fees for variation applications under section 36C of the Act opened on 19 February 2018.

1.15 The Scottish Government hosted a workshop event for developers on 25 April 2018 to encourage participation in the consultation. Details of the attendees are listed in Appendix 1.

1.16 An analysis of all the comments received throughout the consultation has been carried out, which is published in a separate document entitled “Fees Charged for Applications under the Act – Analysis of Consultation Responses” (subsequently referred to as the “analysis report”). The analysis report should be read alongside this document. Following requests for more information, supplementary information was published and the date of the consultation extended by a further two weeks beyond the intended closure date. The written consultation then closed on 28 May 2018. Details of the consultation respondents are listed in Appendix 1.

1.17 The Scottish Government has also engaged with Heads of Planning Scotland through regular attendance at Energy and Resources Sub-committee where the fee proposals have been discussed.

1.18 An analysis of the consultation responses was carried out following which the analysis report was produced. The analysis report should be read alongside this document.

1.19 On the basis of the consultation responses and feedback during the consultation process, Ministers have decided on the fee tariffs and arrangements they wish to introduce. Ministers will implement a fee structure and fee levels as described in the following sections of this document. A comparison of the existing fees, fees consulted on, and the final decision on fees to be implemented is set out in tabular form in section 6 – Schedule of Fees.

Background

1.20 Scottish Ministers are responsible for determining applications for consent for onshore generating stations with installed capacity exceeding 50 MW and overhead power lines in Scotland under sections 36 and 37 of the Electricity Act 1989 (“the Act”) respectively. The Electricity (Applications for Consent) Regulations 1990 and Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2017 apply to such applications, which are processed on behalf of Scottish Ministers by the Scottish Government’s Energy Consents Unit. The Scottish Ministers are also responsible for determining applications for consent for generating stations with installed capacity exceeding 1 MW in Scottish Territorial waters and over 50 MW in the Scottish Renewable Energy Zone (REZ). Such applications are processed on behalf of Scottish Ministers by Marine Scotland Licensing Operations Team. We publish details of our applications online at http://www.energyconsents.scot and http://www.gov.scot/Topics/marine/Licensing/marine/scoping.

1.21 In the marine environment in addition to the requirement to obtain a section 36 consent a marine licence with a separate fee structure is required under the Marine Scotland Act 2010 and under the Marine and Coastal Access Act 2009. Details can be found online at http://www.gov.scot/Topics/marine/Licensing/marine/feestructure.

1.22 Our ambition in discharging our administrative function is to deliver certainty around our application processes and timescales, to be inclusive and transparent in the work that we do and to deliver an efficient service to all of our stakeholders which focusses on high quality outcomes.

1.23 Our Energy Strategy and National Marine Plan signal the opportunities to shape our future energy system, and to help tackle the challenges of climate change, affordability of energy, and the efficiency of our energy use. The supply of safe, reliable energy underpins the continued growth of the Scottish economy and delivery of key services. Our energy industry provides high quality jobs and a vibrant climate for innovation.

1.24 We continue to receive a significant volume of applications for complex energy infrastructure proposals, and wish to ensure we are properly resourced to deliver the standard of service that our stakeholders wish to see, and to promote the development of the wide range of low carbon and onshore and offshore renewable energy technologies in Scotland as part of the increasingly diverse and dynamic energy mix that the Scottish Government wants to achieve.

1.25 The Scottish Public Finance Manual sets out that the standard approach to setting out charges for public services should be full cost recovery. . Our income from fees charged for applications under the Act has consistently fallen short of the costs of providing the service of determining such applications, which is incompatible with the standard approach to setting charges for public services. We have reviewed the fees that we charge, to maintain service delivery and to support continued improvement.