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England and Wales, which may result in the recycle payments per ROC in Scotland being much higher than elsewhere.

This uncertainty is damaging for the growth of renewables and distracts suppliers into guessing competitor behaviour rather than getting on with development of an effective market in renewable power. The problem would be entirely eliminated with a merged fund, where any difference in submissions would be smoothed to a GB average. As ‘GB average compliance’ effectively determines the price at which ROCs are traded, a merged fund would provide the best solution for all market participants.

This issue needs to be addressed, and we do not believe that addressing it needs to wait for consideration of a merger with the Northern Ireland fund. Indeed, if the issue is resolved before the NI fund is set up, it will allow NI to slot easily into a merged ‘UK’ fund, and will prevent suppliers in NI being exposed to the same issues currently faced by suppliers in Scotland.

The current situation is unwelcome to all supply companies and generators alike, as it introduces unnecessary uncertainty into the market. We understand that the required change could be made by secondary legislation alone and would not prevent the auction of ROCs from SRO renewable generation in Scotland.

Suppliers do not finalise their redemption until close to the 30 September deadline. Accordingly, it would be quite feasible to consult on this issue in late May and early June and get a short revising order approved by Parliament before the recess. The order would correct this problem in time for settlement of either the 2003/04 obligation period or 2004/05, depending on the views expressed in consultation.

Swift action to remedy this obvious defect would be most helpful and would be a positive signal of the Government’s commitment to maintain the integrity of the RO market.

Yours sincerely,

Philip Wolfe, CEO, RPA.

Powergen RWE Innogy Scottish and Southern ScottishPower Energy Retail Ltd EDF Energy plc British Energy Ltd Centrica Good Energy Bizzenergy Ltd.

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