Applications under the Electricity Act 1989: fees charged

Annex 2 - Partial Business and Regulatory Impact Assessment

Title of Proposal

The Electricity (Applications for Consent) Regulations 1990 and Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2017

Purpose and intended effect

• Background

  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 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.

• Objective

  Scottish, UK and EU policy mandates a transition to a more decarbonised energy system with increased use of low carbon energy sources. The deployment of new generation and associated grid infrastructure is central to this. At the same time, policies are in place at Scottish and EU level to safeguard the environment. A well-resourced energy consenting regime is vital to achieving both these aims.
  In accordance with the Scottish Public Finance Manual, the Scottish Government adopts the principle that there should be full cost recovery for all public services, including those associated with discharging consenting functions including post consent work under the Electricity Act 1989. There has been a shortfall in cost recovery for a number of years, which is now impeding our ability to resource our consenting functions in the manner to which we aspire. We are reviewing the fees that we charge, and propose increases to maintain service delivery and to support future improvement.

• Rationale for Government intervention

  The proposal contributes to the following objectives of the National Performance Framework:

  • We value and enjoy our built and natural environment and protect it and enhance it for future generations
  • Our public services are high quality, continually improving, efficient and responsive to local people's needs
  • We realise our full economic potential with more and better employment opportunities for our people.

  The proposal contributes to the Purpose Targets – Increase Scotland's Economic Growth and Reduce Greenhouse Gas Emissions – and the following National Indicators:

  • Improve people's perceptions of the quality of public services
  • Improve the responsiveness of public services
  • Increase renewable electricity production

Consultation

• Within Government

  The following Government directorates have reviewed the proposals as formulated: Marine Scotland; Planning, Architecture and Design; Planning and Environmental Appeals; Directorate For Energy And Climate Change; Scottish Government Legal Directorate. Their input has supported the formulation of the policy proposals by providing a cross-check on any potential conflicts with other policies that may have needed to be addressed; for example, the recent review of planning fees; and more generally in helping to refine the scope of proposals being consulted on.

• Public Consultation

  There has been limited informal consultation with developers and planning authorities to flag the intent to review fees. It is our intention to use the current full public consultation to produce a final BRIA from this partial BRIA.

• Business

  The Scottish Government is proposing to contact trade associations (Scottish Renewables) and key businesses engaged in applications for consent which are likely to be impacted on by the proposals. This would be in addition to the published, written consultation and would take the form of a meeting where the Scottish Government would present details of its intentions and invite discussion and feedback on the proposals. Any feedback would be summarised and recorded.

Options

1. Do nothing.
2. Increase the existing fees as proposed and introduce new fees for variations in alignment with the fees for applications.
3. Increase the existing fees as proposed and introduce new fees for variations in alignment with the fees for applications. Introduce phasing of payments such that a proportion of application costs are paid at EIA screening or scoping stages.

Sectors and groups affected

The groups that we anticipate to be affected by the proposed changes are limited to those which would pay application fees for their development proposals to be determined by Scottish Ministers under sections 36, 36C or 37 of the Electricity Act 1989. These are the developers of electricity generating stations proposals and developers of overhead line proposals.

Benefits

Option (1)
The first option would be to continue with the current model which is based on the Electricity (Applications for Consent) Regulations 1990. Therefore there would be no impact on business to consider regarding fees to be paid, and neither would there be any benefits to business in terms of the service delivered.

Option (2)
The proposed changes would contribute to the Scottish Government's vision of Scotland where "we value and enjoy our built and natural environment and protect it and enhance it for future generations"; "our public services are high quality, continually improving, efficient and responsive to local people's needs" and "we realise our full economic potential with more and better employment opportunities for our people".The benefits to businesses would be:

• The delivery of service from the Scottish Government would continue, or improve, on current levels
• For onshore applications, a scale of fees more consistent with local planning fees and a smoother transition around the 50 MW threshold between applications under the Town and Country Planning (Scotland) Act 1997 and under section 36 of the Electricity Act 1989.

Option (3)
The proposed changes would contribute to the Scottish Government's vision of Scotland where "we value and enjoy our built and natural environment and protect it and enhance it for future generations"; "our public services are high quality, continually improving, efficient and responsive to local people's needs" and "we realise our full economic potential with more and better employment opportunities for our people". The benefits to businesses would be:

• The delivery of service from the Scottish Government would continue, or improve, on current levels
• For onshore applications, a scale of fees more consistent with local planning fees and a smoother transition around the 50 MW threshold between applications under the Town and Country Planning (Scotland) Act 1997 and under section 36 of the Electricity Act 1989.
• The application fee would not be required to be paid in a single lump sum, but paid in instalments in proportion to the level of risk for the business.

Costs

Option (1)
We have already identified that the status quo is a significant departure from the principle of the Scottish Public Finance Manual that there should be full cost recovery for all public services which cannot be sustained, as it is standing in the way of the Government's vision where "our public services are high quality, continually improving, efficient and responsive to local people's needs". The costs to businesses of maintaining the fees at their current level would be a much reduced service level, for example applications may take considerably longer to determine and our capacity may be reduced for holding meetings with key stakeholders to explore important issues and gain clarity on how these may be addressed. Not only would our service level to businesses be degraded, but other future enhancements which may add value would be precluded if they have a resource cost attached.

Furthermore, an unwanted incentive would be sustained regarding the sizing of onshore generation projects at the design stage, where planning fees charged by local authorities for determining applications up to 50 megawatts ( MW) installed capacity under the Town and Country Planning Act (Scotland) 1997 are considerably greater than fees charged by the Scottish Government for section 36 consent. This could drive developers towards sizing some proposals over the 50 MW threshold to save on application fees, which may not be optimally sized in terms of the balance between adverse environmental impacts and policy benefits. In turn this could increase the risk for developers that their section 36 application fails or is abortive.

Option (2)
The costs to businesses as a result of implementing option 2 are financial, as detailed in the consultation paper. Beyond the financial cost no other costs have been identified.

Option (3)
Similarly to option 3, the costs to businesses as a result of implementing option 3 are financial, as detailed in the consultation paper. Beyond the financial cost no other costs have been identified. However, under option 3, these costs are spread over the project development cycle and are not due in a single lump sum at application stage.

Scottish Firms Impact Test

A Scottish Firms Impact Test will be carried out following wider consultation and consideration of the response to the published consultation.

Competition Impact Screening

The Scottish Government has considered the following questions:
Will the measure directly or indirectly limit the number or range of suppliers?
Will the measure limit the ability of suppliers to compete?
Will the measure limit suppliers' incentives to compete vigorously?
Will the measure limit the choices and information available to consumers?
We consider the answer to each question is no and on that basis no in-depth competition assessment is required.

Test run of business forms

No new forms will be introduced.

Legal Aid Impact Test

The proposal does not create a new procedure or right of appeal to a court or tribunal, any change in such a procedure or right of appeal, or any change of policy or practice which may lead people to consult a solicitor.

The proposal is not likely to result in additional people seeking legal assistance or being taken through the courts.

Enforcement, sanctions and monitoring

Payment of fees will be monitored by the Energy Consents Unit and Marine Scotland Licensing Operations Team. If an application is submitted without the required fees having been paid, it will not be a valid application and will not be capable of being determined.

Implementation and delivery plan

It is intended that implementation of any changes to fees will take place in the second half of 2018.

Post-implementation review

It is our intention that the fees will be reviewed again within 5 years.

Summary and recommendation

Option 3 is recommended, as it allows the Scottish Government to meet its aspirations to have full cost recovery for all public services.

• Summary costs and benefits table

Option	Total benefit per annum: economic, environmental, social	Total cost per annum: economic, environmental, social policy and administrative
1	No benefit	Degrading of service received by business from Scottish Government to business in determination time and loss of advantages of front-loading application process.
2	Service received by business from Scottish Government maintained and can be improved	Financial cost to business depends on number and details of applications submitted but clearly set out in table of new fees that will apply in consultation paper
3	Service received by business from Scottish Government maintained and can be improved Costs are spread over project development lifetime and not all payable in one go	Financial cost to business depends on number and details of applications submitted but clearly set out in table of new fees that will apply in consultation paper

Declaration and publication

I have read the Business and Regulatory Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options. I am satisfied that business impact will be assessed with the support of businesses in Scotland.

Signed:

Date: 17/01/2018

Paul Wheelhouse MSP
Minister for Business, Innovation and Energy