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Fossil Fuel Levy Rate in Scotland

19/12/1997

Professor Stephen Littlechild, Director General of Electricity Supply, today announced that the Fossil Fuel Levy in Scotland will be 0.8 per cent from April 1, 1998, an increase of 0.1 per cent from the present rate.

The levy is required to recover the additional costs to ScottishPower and Hydro-Electric of the Scottish Renewables Obligation (SRO), under which the PESs are required to contract for specified amounts of electricity capacity at generating stations powered by renewable sources including wind, hydro and waste.

Professor Littlechild said:

"In setting the rate I have taken account of the forecast that more renewable generating capacity will become available under the SRO during 1998/99, as well as the Government's intention that electricity generated from nuclear sources will become leviable from April 1, 1998. In addition the costs of SRO schemes in 1997/98 will be lower than originally assumed and the surplus of levy collected will be carried forward into the next year. Without this carry forward it would have been necessary to set the levy at just over one per cent."

BACKGROUND

1. The Director General is required to set the levy periodically under The Fossil Fuel Levy (Scotland) Regulations 1996.

2. Initially, (February 16, 1996 to March 31, 1997) the levy was set at 0.5 per cent by the Secretary of State for Scotland. The rate for the period April 1, 1997 to March 31, 1998 was set by the Director General at 0.7 per cent.

3. The Scottish Renewables Obligation, a mechanism used by the Government to create an initial market in established renewables technologies, is made under section 32 of the Electricity Act 1989 which enables the Secretary of State to require ScottishPower and Hydro-Electric to secure certain amounts of capacity from renewable generating stations.

4. Under the SRO, ScottishPower and Hydro-Electric have entered into a total of 56 contracts with renewable generators for an overall capacity of 190MW.

5. The Fossil Fuel Levy Rate for England and Wales has been set at 0.9 per cent from April 1, 1998.

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