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Ofgem
Scottish Trading Arrangements
Submission from UNISONScotland
1. As stated in our previous submissions on this issue UNISON Scotland
remains unconvinced that a case has been made for radical reform
of the Scottish Trading Arrangements. The electricity industry in
Scotland is fundamentally different to England and Wales and we
believe our structure is inherently more efficient and in the best
interests of the consumer and the Scottish economy.
2. Despite the lengthy explanations justifying reform in Ofgem
publications, one argument is continually repeated. Namely that
this proposal would be compatible with the arrangements in England
and Wales. It therefore appears that the primary aim of Ofgem, irrespective
of the merits of the case, is to bring Scotland into line with England
and Wales. This type of justification in any area of public policy
is bitterly resented in Scotland.
3. We have previously commented on the issue of interconnector
access and the disincentives for future investment the Ofgem approach
creates. Whatever charging arrangements are agreed we believe they
must reflect the true costs to the Scottish transmission companies.
It is not the function of hard pressed Scottish electricity companies
to subsidise competitors from south of the border.
4. Our primary interest in this paper is the establishment of the
Scottish System Operator (SSO) and the staffing implications for
our members in Scottish Power, Scottish & Southern Energy and
SESL who could be affected by this proposal. UNISON Scotland does
not believe that a case has been made for the establishment of a
separate SSO. No evidence has been produced of bias or lack of transparency
and efficiency in the current arrangements. In addition there does
not appear to be any proposals for an equivalent arrangement south
of the border with NGC. We believe that the internal business separation
model already in place for the transmission businesses would be
the least worse and most cost effective option. Setting up duplicated
support sections, equipment, software etc. is simply an additional
cost which will have to be paid for by the consumer.
5. Our main concern relates to the staffing proposals which we
believe are both unreasonable and unworkable. In particular:
· Staff moving to the SSO from a current licensee will
have contributed to Sharesave (or similar) schemes. Who will compensate
staff the current and future loss if they are unable to hold shares
in these companies?
· The proposed restrictive covenants on staff moving back
to SP or SSE are unreasonable (and possibly unlawful) as in most
cases this is their only career development path in Scotland.
· Whilst staff would be probably be covered by TUPE this
does not at present cover their pension arrangements. How will
such a small joint venture company be able to provide equivalent
pension provision to ensure that staff do not lose the full value
of previous contributions.
· There are several other benefits staff enjoy by being
part of a large company operating in their chosen career area
which would also be lost if the degree of separation proposed
was introduced.
· How are new staff to be attracted to the SSO when they
are entering what will in effect be a career dead end?
6. In essence we believe much greater consideration needs to be
given to these issues including meaningful consultation with the
staff and their trade unions.
7. Ofgem is normally unwilling to intervene in the (often substantial
and almost always detrimental) staffing consequences of its decisions.
UNISON has consistently argued that Ofgem should recognise the economic
and staffing impact of regulatory decisions. Is this a shift in
direction or an isolated foray?
8. In conclusion UNISON Scotland believes that no evidence has
been presented to justify the proposed Scottish Trading Arrangements
or the establishment of an SSO isolated from the industry. In particular
we are concerned over the staffing implications of the SSO for existing
and future staff and would urge further detailed consultation on
this issue.
Dave Watson
UNISON Scottish Organiser (Utilities)
7 June 2000.
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