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Scottish Parliament Speech: Transmission Charging (April 2010)

See this speech in context on They Work For You.

Wendy Alexander made a thoughtful contribution to the debate, from which I found myself parting only towards the end, when she was talking about the wider picture. Patrick Harvie talked about the obvious wider picture in relation to the oncoming scenario of peak oil, but Wendy Alexander confronted us with the possibility of having to work on speaking terms with Ofgem.

I remember when Ofgem delivered pyrotechnic examples of the higher mathematics of more perfect markets to the Economy, Energy and Tourism Committee and had us all glazing over with incomprehension.

I was also reminded of some other bureaucrats whom the Economy, Energy and Tourism Committee met when we went to Denmark and visited research and governmental offices, where people were pioneering an impressive system that involved combined heat and power units, refuse-burning power stations and the like. I noticed that we always had meetings on the third floor of whatever office it was. Lean, athletic 60-year olds - as opposed to us plump, tumshie-like 60-year olds - called Bengt and Lars would go upstairs two steps at a time, while we pecht around behind them. The message got through that, as Patrick Harvie said, it is as much about our personal choices as it is about a long-term scenario. The Danish bureaucrats were hinting, probably none too subtly, that if we use Shanks's pony more, cycle more and run up steps instead of always using the lift - I am a leading offender in that regard over in the members' block - we will not only make ourselves healthier but solve some of our energy problems. I mention that by way of suggesting that we should be looking at narrow energy - to use an analogy from banking - as well as universal energy.

The new Langage power station, near Plymouth, is a modern, state-of-the-art, gas-fired power station, but it appears to have no system of combined heat and power - at least, no such system has been mentioned in descriptions of the plant that I have read. On the continent, it is almost de rigueur to develop not large-scale but relatively small power stations that have combined heat and power units. That is one of the areas in relation to which we must go back to first principles when we are considering subsidising or extending generating capacity.

Instead, with Ofgem, we tend to go back to a sort of secret British Government and these market-preserving units that exist at a distance from us - by God, they did - and at a distance from parliamentary control at Westminster. Behind them lies the even greater weirdness of a great power station such as Drax - which members will pass on the railway line down to London - shooting 66 per cent of its heat right up into the atmosphere. It is 34 per cent efficient; yet, the surrounding area pays less for its power per kilowatt hour than Dumfries and Galloway, the Deputy Presiding Officer's constituency, where a lot of the power comes from hydroelectric schemes that were built in the 1930s and have long paid off their commissioning costs. And still we see a commitment to the retention of a locational transmission charge - despite opposition in the Scottish Parliament and in the Westminster Parliament and the requirement for new thought on the matter.

At the same time, the new kids on the block who are entering the renewables market come from a situation that resembles the old national grid - they are often state concerns from Denmark or Sweden, such as Dong Energy and Vattenfall. It may be that the market is being manipulated to bring about international power - in other words, to bring wealth to powerful companies that are no longer narrow electricity infrastructure companies but would be big beasts in the international speculative arena. Let us take a closer look at National Grid, for instance. It was the result of a recommendation by the great Scottish administrator Lord Haldane and was built between 1926-38 by Sir William Weir - one of the great organisers in munitions in the first world war and a Conservative - effectively as a state-controlled national utility. Yet, since 1990, as a plc, it has become an international speculative concern that has sunk several billion pounds into the sort of ventures in the United States that do not, when one sees them cited in the newspapers, convey much in the way of security. It seems to be getting its operational speed up from lending money to the likes of Homer Simpson. The man who sanctioned it all when he was the head of Ofgem was Sir Callum McCarthy, Mr Light-touch himself.

Rather than view the operations of organisations such as National Grid as accounting for the further extension of international speculation, we should look at what the national grid originally stood for. It was not a tool for investment bankers; it was a tool for more Bengts, Larses and professional energy scientists and consultants to get a type of central regime for not just British but - probably, in the future - European systems of power exchange that would preserve us from the likely consequences when the $300 barrel of oil hit us, as it will in the next 20 years.

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