Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps Ofgem are taking to reduce electricity losses in the transmission and distribution systems; and what assessment he has made of the effect of those losses on Scottish (a) businesses and (b) consumers.

Distribution Network Operators (DNOs) and Transmission Owners have an overarching obligation to develop and maintain efficient, co-ordinated and economical systems. Ofgem has also placed specific licence obligations on them to ensure that losses are as low as reasonably practicable. Whilst Government and Ofgem are aware of potential approaches to minimising losses, including through the use of low resistance cables, network companies are not instructed exactly how to go about this. Instead, Ofgem sets incentives for network companies, including broader environmental incentives on losses and business carbon footprint. These incentives have encouraged the network companies to proactively manage losses on their networks to the extent to which this is possible. For example, it is now widespread practice across GB to replace ‘high-loss’ cables with newer ‘low-loss’ substitutes, where this is efficient. The DNOs are also undertaking a programme of replacing pre-1960s transformers with newer more efficient types.

Neither Government nor Ofgem specifically records the effect of losses on Scottish consumers and businesses. However, as part of developing their business plans for future capital expenditure, Ofgem will require network companies (including the Scottish network companies) to take into account the lifetime costs including losses, when deciding between different equipment.