Keeping the lights on

In earlier blogs I have argued that we need to do more work to plan for transitioning to independence. By coincidence Iain Wright has had related thoughts in the specialist area of preparing to ensure there is no disruption in our basic energy supply. I am no expert in such matters, which further demonstrates the need to ensure we draw in all the necessary talents within the movement! So Iain, tell us about keeping the lights on:

In this blog I take a look at a key component of Scotland’s energy arrangements that has, up until now, been pretty much ignored in any discussion around the country’s energy future. Yet it is an issue to which we can no longer turn a blind eye if we believe that independence is on its way and we want the lights to be on when that day comes.

This is not about the widely-accepted vision for a sustainably clean, green, renewable and cheap energy future. These considerations are about big picture policy choices rather than the nitty gritty of actually keeping the show on the road and in any case, Common Weal has comprehensively explored the policy choices in its plan for a sustainable energy system that fully integrates with wider societal goals. Rather, in the case of electricity, it is about ensuring that energy will continue to be produced and transported to customers; in short, keeping the lights on. Whether you believe that batteries, hydrogen, wind or gas turbines are the solution, your underlying assumption is always that there will be an institutional framework supporting your chosen solution.

By “institutional framework”, I’m talking about the complex and highly-interdependent array of legal, technical, management, commercial and international requirements currently in place to ensure the system keeps functioning decade by decade and millisecond by millisecond. These are arrangements that have evolved over more than a century, from a focus on public lighting, to addressing consumer protection and fair operation of domestic and international trading in markets transacting eye-watering amounts of money, based on the exchange of terabytes of data between market participants. Current arrangements cannot just come to an abrupt halt while the sovereign Scottish Government decides what to do with the electricity sector. Nor, for a variety of reasons, can existing arrangements just carry on regardless.

It isn’t even as easy as just deciding to nationalise the whole system. The interdependence of law, software and industry structures, to which I referred earlier, is only a part of the larger political picture. As a (transitioning out) member of the EU, we currently comply with the broad framework of legally-binding rules that define the competitive European internal market in electricity. The scope of this legislation covers, competition in electricity production and in supplying customers, consumer protection, environmental standards and trading across international borders. It also defines market roles and ownership limitations consequent on the overarching policy objective of benefiting consumers through competitive markets. Signing up to the EU post independence means Scotland’s ongoing compliance with this vision for electricity and the energy sector more generally.

For those asking whether the EFTA/EEA halfway house a realistic alternative to explore an alternative path? The simple answer is, “No”. The words, “Text with EEA relevance” appear on EU legislation to do with the Single Market, meaning that EEA countries (EFTA minus Switzerland) must implement the same requirements as EU Member States, albeit via the more circuitous route of incorporation into the EEA Agreement and thence into national law.

So, the reality is that policy choices around an independent Scotland’s electricity sector cannot be made in isolation, based solely on idealogical considerations. They will be constrained, to a greater or lesser extent, by wider policy choices in the realm of international alliances.

The good news is, of course, that Scotland is already aligned with the wide sweep of European law. The less good news is that this alignment comes via GB law, which is reserved, and operates within organisational and technical structures largely based in England.

In itself this not an insurmountable hurdle. After all, there is a single electricity market for the whole of the island of Ireland even though this includes two independent Member States. Arrangements have been defined that recognise the equal status of the two jurisdictions in matters of law, while market functions are operated as regulated commercial agreements. Ultimately however, the whole edifice is predicated on an agreement between the UK and Irish governments that is only possible because of the overarching EU treaties that require dynamic compliance with EU law by both jurisdictions on the island.

Of course many legal obligations and technical standards in the industry have little to do with Single Market requirements. Other requirements may originally have been introduced to implement EU legislation, but are integral to current industry arrangements. There is no sensible argument for any course of action other than to designate both these groupings as “retained law” and adopt them unchanged into Scots Law, except to redirect GB legal obligations to new, Scottish institutions. On this robust legal foundation, the new, independence government will build its chosen industry structure and enable interactions with neighbouring power systems. But what form should the electricity industry take in an independent Scotland?

I suggest a starting assumption might be that an independent Scotland will choose not to sail off into the North Atlantic, taking back control and reinventing everything in splendid isolation. So decisions must be made on with whom and on what basis we will seek to co‑operate, a process that requires us to define and prioritise the options.

In terms of high‑level industry framework, the first preference would probably be to work with the rUK government to maintain and adjust the current GB BETTA market arrangements to fit the new, two‑state situation. This is perfectly feasible although, recognising that the nature of co‑operation is that there is a willing counterparty with whom to co‑operate, this option may be undeliverable, narrowing the options to those with wider political, if more technically challenging, support.

In the foregoing, I’ve tried to avoid prescribing answers to some of the issues that must be faced in ensuring a reliable and sustainable electricity sector in a post‑indy Scotland. There is no sense in just ignoring the challenges and asserting that a potentially unwilling partner will just see sense and invest to accommodate our desires. I recall, in management class 1.01, a lecture entitled “managing in uncertainty”, in which planning for contingency was highlighted as a basic attribute of competent management. In current political parlance, “we need a Plan B”.

Expert engagement is required with the EU generally and Ireland in particular, to ascertain available options and their political and technical feasibility. If derogations are required from EU rules, we must know whether or not they will be forthcoming. This process will take time. Other areas closer to home, such as a strategy to build or restore institutional structures and expertise in areas such as regulation or market operation, may have less external dependency but procrastination should be avoided.

If independence is a primary objective, then acting now to establish credible alternative approaches for complex issues like the electricity sector, is more likely to encourage a reluctant counterparty to accept the sensible first choice solution, than panicky begging in a time-constrained setting.

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