Debate on the introduction of energy rebates for Highlands and Islands

Background

This debate relates to the Highland Energy Rebate campaign, which is advocating for a scheme that would offer financial rebates to Highland and Islands residents, offsetting the higher per-unit costs of electricity they currently face.

The campaign is led by Drew Hendry, Member of Parliament for Inverness, Nairn, Badenoch and Strathspey, and Brendan O’Hara, Member of Parliament for Argyll and Bute.

The Highland Energy Rebate campaign

The Highland Energy Rebate: In brief report (PDF) sets out the aims and objectives of the Highland Energy Rebate campaign.

The campaign is advocating for a scheme that would provide financial support for residents of the Highlands & Islands to help with their energy costs. It notes that the Highlands & Islands region contributes significantly to the UK’s production of renewable energy but that its residents face relatively high energy costs due to transmission and distribution charges.

The proposed scheme would provide rebates to eligible consumers through either a percentage reduction in energy bills or through annual payments. Eligibility would be for areas where renewable power generation is significantly above local usage. The scheme could be administered by local councils or energy suppliers.

Potential benefits of the rebate scheme

Advocates of the Highland Energy Rebate scheme suggest a number of benefits:

• At the national level, they say the proposal aligns with net zero targets, would reduce fuel poverty, address regional disparities and promote economic stability.
• For the residents of the Highlands & Islands, they say it would improve quality of life, empower the community and boost the local economy.
• For energy companies, the proposal could promote a positive public image, assist with local approval for infrastructure projects, and align with corporate sustainability and social responsibility goals.

Potential objections to the rebate scheme

A number of potential objections to the proposed rebate scheme are addressed by the campaign, including high costs of implementation, complexity in administering the scheme, setting a precedent for other regions, and market distortions or disruptions.

Background information on the Highlands & Islands energy sector

• While the population of the Highland Council area comprises only 0.36% of the UK total, this area provides 5.5% of the UK installed capacity for renewables. (The Royal Society of Edinburgh, The cost of living: impact on rural communities in Scotland (March 2023, PDF))
• Northern Scotland generally pays above average rates for electricity and gas standing charges, although according to data from the GB energy regulator, Ofgem, for April to June 2024 it is not expected to pay the highest standing charges. (Ofgem, Get energy price cap standing charges and unit rates by region (accessed 1 March 2024))
• The Library briefing Fuel poverty in the UK (February 2024) notes that in the latest estimates Scotland has the highest rate of fuel poverty in GB – 20% in Scotland compared to 13% in England and 14% in Wales (it is 24% in Northern Ireland but please note the methodologies of measuring fuel poverty vary across regions).
• The Fuel Poverty (Targets, Definition and Strategy) (Scotland) Act 2019 sets out targets to reduce fuel poverty nationally and in each local authority area. It includes actions to tackle four drivers of fuel poverty: poor energy efficiency of the home; high energy prices; low household income; and how energy is used in the home.
• The Scottish Government’s Scottish House Condition Survey: Local Authority Analysis 2017-2019 (February 2021) provides a regional breakdown of fuel poverty in Scotland by local authorities (Figure 5 p.8). This shows that Na h-Eileanan Siar in the Outer Hebrides had the highest rates of fuel poverty.
• The Scottish Government provide guidance on Community benefits from onshore renewable energy developments (May 2019). These are renewable industry led voluntary initiatives to provide community benefit packages that can deliver a range of local benefits. Currently, the Scottish Government promotes community benefits of the value equivalent to £5,000 per installed megawatt of onshore wind energy per annum.
• The Scottish Government has published its Draft Energy Strategy and Just Transition Plan (January 2023). This includes a commitment to ensure people have access to affordable clean energy.
• The UK Government held a consultation on Community benefits for electricity transmission network infrastructure (November 2023). In response to the findings of this consultation, the UK Government are recommending an electricity bill discount for properties located closest to transmission network infrastructure and a wider benefit payment for the local community. The Highland Energy Rebate campaign note that this proposal is a similar scheme for those living close to energy infrastructure as they are proposing for those living close to renewable energy generating infrastructure.

Member’s debate contribution – Finance Bill

Drew Hendry, MP

“As I intimated earlier, I would have liked to table an amendment on this point: if new clause 5 is applicable to people living next to new generation equipment, what about those who already live among generation equipment in, for example, the highlands and islands? We have the coldest climate in the UK. Most people are off the gas grid, so we have higher average bills than the rest of the UK. We pay the highest standing charge for electricity, 40% more than here in London, and because of UK Government policies, we have the highest level of fuel poverty in the UK, yet we export six times more electricity than we use in the highlands. It would have been entirely appropriate for the Minister to agree to introduce a highland energy rebate, to put some of that contribution back into the pockets of people across the highlands and islands who are struggling because of those conditions.”

HC Deb 5 February 2024 | Vol 745 c66-

Further reading and news items

Highland Energy Rebate Campaign
The Highland Energy Rebate: Powering a fairer Energy Future.

Strathspey & Badenoch Herald
23 January 2024
DREW HENDRY: Why is the Highlands being ripped off over energy bills?

Inverness Courier
23 January 2024
DREW HENDRY: We must tackle energy market inequity right now

The Highland Times
11 January 2024
Highlands & Islands MP’s Launch Highland Energy Rebate Campaign

Northern Times
19 November 2023
Drew Hendy is calling for a £400 energy bill rebate before the UK budget