Electricity Act 1989 applications - proposed fee changes consultation: Scottish Government response

2. Review of the fee levels and arrangements

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, four questions were asked. Further details of the responses together with an analysis are provided in the analysis report. The questions asked were:

Question 1 - Do you agree or disagree with the proposed application fees as set out at Table A? Please say why you have arrived at this view.

Question 2 - Do you agree or disagree with the new bandings for developments with a capacity greater than 500 MW as set out at Table A? Please say why you have arrived at this view.

Question 3 - Do the proposed application fees set out in this consultation have any financial, regulatory or resource implications for you and/or your business (if applicable)? If so please explain these.

Question 4 - Do you have any other comments?

The Scottish Government's key objective was to meet the running costs of the service provided by ECU and MS-LOT in line with the Scottish Public Finance Manual. The increase in fees will support a well-resourced energy consenting regime, vital to support Scotland's transition to a more decarbonised energy system.

Question 1

The consultation asked, in Question 1, whether respondents agree or disagree with the proposed application fees as set out in Table A.

Respondents were divided on this, eight agreed with the proposed application fees, eight disagreed, and nine were unsure or unclear. The respondent types showing most widespread agreement with the proposal in Question 1 were an electricity networks company, the other membership body, some electricity generation developers and individuals. There was also a demonstration of support in principle for proposed fee increases from planning authorities in their responses. The respondent types showing most widespread disagreement with the proposal in Question 1 were electricity generation developers. Nine respondents were unsure or unclear, the majority of which were planning and other public sector bodies.

Some of the most frequently made points (apart from general disagreement or agreement) were that there should be improvements and efficiencies in the consenting process; funding and resourcing provided to planning authorities should be adequate to reflect the costs to planning authorities of processing the applications as statutory consultees; the proposed fees for variation applications, particularly those that do not increase capacity, are too high; the threshold of projects requiring section 36 consents should be increased to 100 MW capacity; impacts on business of the proposed fees cannot be accurately stated without understanding how the Scottish Government arrived at its figures.

Scottish Government Response to Question 1

The consultation paper set out the proposed fees and the monitoring report demonstrated the current fees do not achieve full cost recovery for ECU. The majority of respondents raise no concerns with uplift of fees for network applications and generating stations up to 500 MW which equates to approximately 20% increase. Where developments of 500 MW or more are proposed, new fee bandings will be introduced. Some of the respondents agree with this in principle though request that further information is provided to explain the structure and increase.

In terms of improvements to the consenting process, MS-LOT has recently increased resources significantly within its consenting team to meet the demands of offshore wind expansion and has also established a specific streamlining team to identify and implement efficiencies in licencing and consenting processes. The Scottish Ministers are aligning with the aims of the public finance management given by the Scottish Public Finance Manual.

Question 2

The consultation asked in Question 2 if respondents agree or disagree with the new bandings for developments with a capacity greater than 500 MW as set out at Table A.

Eleven agreed, seven disagreed, and the remaining seven were unsure, unclear or did not respond. The respondent types showing most widespread agreement with the proposal in Question 2 were planning authorities, the other membership body and individuals. The respondent types showing most widespread disagreement with the proposal in Question 2 were electricity generation developers. 5 respondents were unsure or unclear from various group types.

Some of the most frequently made points (apart from general disagreement or agreement) were that the proposed increases appear arbitrary and are not supported by a robust evidence base; planning authorities should receive an adequate proportion of the application fees for offshore projects; the outcome of the 2019 fees consultation was to not introduce bandings for projects over 300 MW on the basis that costs do not significantly increase once a threshold of 300 MW is crossed, and the level of resources required to assess them are likely to remain similar.

Scottish Government Response to Question 2

The fees put out to consultation were based on the projected increased running costs of both the ECU and MS-LOT. The fees monitoring report recognises that there is a continuing shortfall to achieve the aim of full cost recovery. The Scottish Government has determined that the fee structure should broadly be maintained, with the introduction of additional bands for larger electricity generation projects as proposed. The fees shall be revised or set as consulted on.

The increases from 500 MW and above are to reflect the growing scale of offshore wind developments expected through the ScotWind process and the resources required to handle those applications. ScotWind is the first leasing round in Scottish waters for a decade, and is estimated to have a potential capacity of around 28 GW across 20 projects. The additional bandings from 300 MW and above and increased fees were thought to be necessary for this scale of development. The fee levels relating to these bandings correlate to the increase in scale, likely complexity, and therefore the predicted increase in resource demand.

The Scottish Government did not propose any change to the voluntary arrangements where planning authorities receive ex-gratia payments from the Scottish Government. Such payments are outwith the scope of the Electricity Act and regulations made under the Electricity Act. We note that planning authorities have suggested they should receive additional payments to reimburse some of the costs they incur in their work in relation to offshore applications. The Scottish Government shall invite planning authorities to provide more information on their costs in this regard as a consideration separate to this fee consultation. While no change will be implemented as a direct result of this consultation, having further information from, and discussion with, planning authorities in due course will allow us to review this in future on the basis of detailed evidence provided.

Question 3

The consultation asked in Question 3 if the proposed application fees set out in this consultation have any financial, regulatory or resource implications for the respondent and/or their business (if applicable)?

Eighteen agreed, four disagreed and three were unsure, unclear or did not respond. The respondent types showing most widespread agreement with Question 3 were electricity generation developers, developer membership organisations, planning authorities, the other membership body and individuals. Individuals and electricity networks companies were divided. Three respondents were unsure, unclear or did not respond from various group types.

Some of the most frequently made points were that the proposed increases have considerable financial implications for developers as they would increase the budget required for projects; and, the financial implications for planning authorities in responding to applications are significant and revised fees will not cover costs particularly where a public inquiry is triggered.

Scottish Government Response to Question 3

We recognise, from the feedback, that the fees levels consulted on would add to the costs met by the developers of proposals, with a possibility in some extremely borderline viable projects that developers may not wish to proceed. However, the current position is that the Scottish Government is effectively subsidising developers as the current costs of applications are not meeting the cost of providing the service to determine the applications. The Scottish Government considers that the increases will not undermine policy objectives of the growth of low carbon energy and infrastructure and that properly resourced energy consenting functions support the economic growth of the relevant business sectors.

We did not propose or consult on changes to the payments made to planning authorities as these payments are outwith the scope of the regulations made under the Electricity Act which we intend to amend. The current payments to planning authorities are voluntary, ex-gratia payments for processing the application. While we were not presented with detailed evidence and proposals for change from planning authorities we welcome further discussion on this in future.

Question 4

In response to the final question, Question 4, asking if respondents have any other comments, there were many points made by respondents which are listed in the analysis report. Frequently made points (from more than two respondents) included the following:

• legislation should be amended to increase the threshold for projects requiring section 36 consents rather than the threshold remaining at 50 MW, so that a greater proportion of applications are processed as planning applications and dealt with by planning authorities. (6)
• increased fees should result in improvements to the consenting service and timeframes/there should be clear goals or key performance indicators set on improvements (5)
• further information is required to justify the magnitude of the proposed fee increases (3)
• a separate fund could be established to support planning authorities, and perhaps community groups, to take part in public inquiries (3)
• the fees paid to planning authorities should be used to contribute towards improving the planning authorities' role in the energy consenting regime and should be tied to the performance of each planning authority (3)

Scottish Government Response to Question 4

The comment with regards to the Scottish Government exploring the benefits or disadvantages of altering the 50 MW threshold for renewable energy developments is not a matter for this fee consultation. Given that the matter has been raised, the 50 MW threshold shall be considered further by the Scottish Government.

The Scottish Government is committed to delivering an efficient and effective consenting process that is critical to unlocking the potential to deliver renewable energy development and economic benefits to contribute to achieving net zero targets. ECU and MS-LOT are continuing to review the consenting process to streamline processes and consider the comment that payment to planning authorities should be performance related.

By increasing fees as proposed we are respecting the aims of the Scottish Public Finance Manual on charges for public services. Our current fees fall short of the costs of providing the service to determine the energy infrastructure developments applications. The additional bandings and increase in fees above 500MW reflects the scale of offshore wind development expected to be submitted. Our resources need to be able to meet the rapid growth in complexed applications and provide the adequately resourced unit to deliver an appropriate level of service that contributes to the delivery of the Energy Strategy.

The response to the points in relation to improvements to the consenting service / timeframe have been set out above. As indicated above, we did not propose or consult on changes to the payments made to planning authorities or introduction of payments to community groups or other consultees. The payments to planning authorities are outwith the scope of the regulations made under the Electricity Act. While we were not presented with detailed evidence and proposals for change from planning authorities or community groups in relation to applications where a public inquiry is caused, we welcome further discussion on this in future. Regarding the suggestions that the payments should contribute towards specific performance improvement within planning authorities, local authorities are responsible for their own administration of their planning functions and it would not be appropriate for the Scottish Government to intervene.