Iain Todd Department of Trade and Industry Atholl House 86-88 Guild Street Aberdeen AB11 6AR
Neil Stewart Head of Energy Policy Unit Scottish Executive
Also copied to
Department of Trade and Industry, 1 Victoria Street London SW1H 0ET
13th May 2004
Dear Iain [Neil],
I am writing on behalf of the major supply companies listed below, as well as the RPA’s wider membership, to ask for the merging of the England/Wales and Scotland buy-out funds prior to recycling to be implemented as a matter of urgency. We, along with others in the renewable industry, have been pressing for this for some time and are concerned that the Government has no plans even to consult on merging the buy out funds prior to the 2005-6 review. This would leave the current unsatisfactory situation in place for several years.
Under the existing arrangements, suppliers can choose to redeem ROCs in different proportions between England/Wales and Scotland, resulting in ROCs redeemed in E&W having a different value to those redeemed in Scotland.
The difference in value is entirely unrelated to the availability of renewable electricity in the two regions. It is a consequence of the relative size of the two obligations when compared with the total supply of ROCs in Great Britain and the individual decisions of suppliers trying to react to anticipated decisions of other suppliers.
In simple terms, it is currently possible for all suppliers to comply 100% with their RO(S) by submitting ROCs, and therefore for the RO(S) buyout pot to fall to zero. Suppliers who submit ROCs in Scotland are therefore exposed to a potential collapse in the value of their ROCs. Conversely, it is also possible for suppliers to redeem most of their ROCs in