The Budget document has set out the government’s intention to bring forward plans to introduce competitive tendering process for onshore electricity infrastructure to ensure better value for money in the next parliament.
It says a competitive regime “could significantly reduce the cost of building this infrastructure” and adds that a similar regime for offshore transmission infrastructure has saved up to £400 million, “helping to lower electricity bills” for consumers.
This follows Tuesday’s announcement from regulator Ofgem that it will start developing the tendering arrangements for onshore transmission assets.
Ofgem aims to run the first tender for the onshore transmission assets in 2016 or 2017.
The budget document also confirmed that a consultation into electricity distribution charges for customers in the north of Scotland will be launched by government.
This could result in distribution charges in the region being cut by £30 per household, and brought in line with the next most expensive region for electricity distribution costs.
The Hydro Benefit Replacement Scheme, which cuts bills for customer in North Scotland by an average of £36 per household is set to remain in place.
SSE chief executive Alistair Philips-Davies wrote to energy secretary Ed Davey in October last year calling for the electricity distribution charges to be “flattened out”.
The following month, both Davey and energy minister Matthew Hancock said that reviewing the electricity distribution charging system was something they were looking at.
Due to the sparsely populated nature of North Scotland, the distribution network has an average system length of 63.2km per 1,000 customers, more than double the UK average of 27.2km/1,000, consumers face higher distribution costs.