This paper constitutes a response from UNISON Scotland to the OFGEM consultation paper "Plan and Budget April 2000 March 2001".

UNISON Scotland welcomes OFGEM's commitment to address the issue of fuel poverty. However, we believe the plan places too great an emphasis on price control as a means of assisting the fuel poor. In our response to the Social Action Plan documents published in May last year we set out our views on a more comprehensive response. We would hope that OFGEM will work more closely with the Scottish Parliament in addressing the wider issues underpinning fuel poverty recognising that at least 20% of consumers in Scotland suffer from fuel poverty.

UNISON Scotland also welcomes the commitment to ensure that barriers to renewable generation and combined heat and power are removed. One of the barriers to encouraging energy companies to invest in these technologies, which at present are only marginally profitable, is the OFGEM pricing regime. We trust that OFGEM will recognise the overall effect of their policies on the industry and the effect this has on desirable developments in this field.

On Scottish Electricity trading arrangements we have indicated our strong opposition to the OFGEM plan in our response to the consultation paper dated November 1999. We can see few merits in imposing the English model on Scotland's integrated electricity industry. There is little evidence that this model has been a success in England or the similar arrangements in the gas industry. OFGEM plans will need to demonstrate that they understand the specific needs of the Scottish consumer and industry rather than simply imposing alien systems on Scotland.

Regarding price controls we believe OFGEM's plans reflect a short term view of the consumer interest. There is little recognition of the impact these controls have on the Scottish economy and the important role the energy industry has in sustaining that economy. As a result of OFGEM's plans (and similar city attitudes) companies continue to be forced into short term cuts in service and investment at the expense of a long term balanced scorecard approach. The consequence is a continual drain of jobs and expertise from the industry.

OFGEM also appears unable to recognise that Scotland's energy companies are increasingly major international utilities. Whilst the companies emphasis on shareholder return does not assist their case on pricing, OFGEM's approach will inevitably force these companies to invest in more profitable areas at the expense of Scotland's energy industry. In essence we would urge OFGEM to take a wider, long term view of their actions.

UNISON Scotland welcomes the preservation of OFGEM's presence in Glasgow. However, OFGEM will need to convince a sceptical Scottish audience that this is not just window dressing.

Dave Watson
UNISON Scotland Senior Regional Officer
January 2000

OFGEM Plan and Budget
April 2000 March 2001

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