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

2. Review of the fee levels and arrangements

2.1 This section sets out the Scottish Government’s review for the fee levels and arrangements taking into account all feedback received through the consultation process. During the consultation process, eight questions were asked. Further details of the responses together with an analysis are provided in the analysis report. The questions asked were:

2.2 The Scottish Government’s key objective was to address the imbalance between income from energy consents fees and the costs of running its energy consents functions. The consultation asked whether application fees should be revised to maintain and improve service levels. The majority of respondents agreed that, in principle, application fees should be revised to maintain and improve our service levels. There was widespread disagreement with the level of increases proposed, however: the industry considered the increases proposed were disproportionately high, although three respondents from planning authorities and other public sector bodies, one political organisation and one individual queried whether the increases were enough and how quickly they would become out of date.

2.3 Comments were also received suggesting that the fee categories and bands should be reconsidered, service improvements should be made, greater remuneration should be given to Planning Authorities, more information on the Scottish Government’s running costs associated with energy consents should be available.

2.4 Comments from those who stated they disagreed with a fixed fee structure included that there should be a sliding scale rather than discrete bands. Electricity networks companies suggested consideration be given to revised scales for overhead lines either per kilometre, by voltage or a combination of both. There was also a suggestion that a new fee category should be introduced to encourage larger, more efficient turbines with a lesser environmental footprint. While there was disagreement over the structure and levels of the particular fixed scales proposed, the principle of fixed fees in general was widely supported.

2.5 The majority of respondents agreed we should introduce phasing of application fees, however those from the electricity generation developer group of respondents who agreed were in a minority for that group, and the respondent from the professional firms and consultants sector disagreed. A number of respondents (though still a minority) indicated that the proposed scoping payments would be disproportionately high.

2.6 Planning authorities and other public sector bodies, political organisations, and individuals were all strongly in favour of retaining the existing arrangement where the same fee is required for overhead lines exceeding 15 km in length whether or not there is EIA development. Both electricity networks companies and one of the business and developer membership organisations were opposed. The majority of electricity generation developers who gave a clear response to this question were also opposed. The electricity networks companies suggested that retrospective consents should have a reduced fee, that fees for overhead lines should avoid steep increases at the transition across fee threshold boundaries and that an alternative fee structure should avoid the disproportionate burden of increases which small scale connection projects would experience under the proposed fees.

2.7 The majority of respondents agreed with our proposal to introduce fees for variation applications under section 36C of the Act to consent granted under section 36 of the Act, but disagreed with the levels proposed and commented that variation fees should be substantially lower than applications.

2.8 Comments were received that there should be two or more tiers of variation fee depending on the complexity of the variation. It was also suggested that variations require a more in-depth review of the inter-relationships that were considered when the original scheme was considered. Planning Authorities in particular were supportive of the proposal, three out of the five Planning Authorities and public sector body group of respondents commented that the resource required in assessing variations can often be as significant as that required to assess the original application.

2.9 We recognise from the feedback that the fees levels consulted on would bring a risk that generation could be less economic to develop than currently, with potentially negative consequences for meeting our energy and climate change targets. The Scottish Government considers that a balance has been struck between the policy objectives of the Energy Strategy for the growth of low carbon energy and infrastructure in the current economic climate, while protecting consumers from excessive costs, and supporting the aims of public finance management given by the Scottish Public Finance Manual. Accordingly, Ministers have determined that a compromise has been reached between the existing fees and consulted on fees which takes account of the comments received through the consultation.

2.10 The Scottish Government has determined that a fixed fee structure should be maintained, but that the bands and fee categories within the existing structure should be revised. The highest fee band for electricity generation over 500 MW shall be removed and the thresholds of upper bands revised, as costs for determining applications are not likely to increase significantly once a threshold of 300 MW is crossed. The bands for charging for overhead lines will also be revised to achieve a spread of application costs more in proportion with the overall development costs, without affecting small-scale connections disproportionately.

2.11 We have determined that application fees should not be phased as proposed in the consultation. Applications may differ widely in the degree of engagement with the Energy Consents Unit at scoping stage and the levels of phased payments at that stage could be disproportionately high in some cases. We have concluded that further monitoring of the costs of providing pre-application engagement should be carried out to inform an analysis before any further consideration is given to implementing a cost recovery mechanism.

2.12 The Scottish Government has determined to charge for overhead lines on a per kilometre basis to avoid the sharp transition in fees around the thresholds of the existing bands. We recognise the concerns of the electricity companies regarding small-scale connections. A revised method of charging shall be implemented on a per-km basis, with separate tariffs for EIA development and non-EIA development applications and measures to proportionately reduce the fees for small-scale connections. While we have considered proposals from the electricity networks companies for additional fee categories for retrospective applications, voltage only increases, and for separate fees for transmission or distribution overhead line applications, we consider there is insufficient evidence at this time to introduce such measures and that further analysis would be required as part of the next review of application fees.

2.13 The Scottish Government recognises that the resource required to determine applications for variation under section 36C of the Act may vary from one application to another, and has determined a fee should be introduced for applications for variation under section 36C of the Act, at a rate lower than the application fee for an equivalent development under section 36.