Through the Hydro Benefit Replacement Scheme, households and businesses in the North of Scotland can continue to save money on their energy bills.

The North of Scotland continues to be exempt from rising energy prices, the UK government announced today, with average savings of £60 to help balance the higher costs of electricity distribution in the area. Along with other UK government programmes like the Energy Price Guarantee and the Energy Bill Support Scheme, this offers additional savings.

The ongoing Hydro Benefit Replacement Scheme (HBRS) and Common Tariff Obligation (CTO), deducted from bills automatically, will offer help totalling £94.9 million.

To give a cross-subsidy and lower distribution charges in the North of Scotland, the government launched the HBRS in April 2005. The region’s distinctive geography makes power distribution more expensive than elsewhere and causes electrical network difficulties. All licenced electricity suppliers in Great Britain must pay fees to the programme, which cost each household £1.

The government intervened after the illegitimate invasion of Ukraine to help Scottish households cope with rising energy costs. 

These include the Energy Price Guarantee, which saves the typical British household about £900, the Energy Bill Support Scheme, which provides the most disadvantaged households with £1,200, and payments of £ 400 toward bills. Graham Stuart, the UK government’s minister of energy and climate, said: “The UK government is committed to ensuring fairness regarding energy costs within the Union and protecting energy customers wherever possible.”

“We are thus reiterating our support for the Common Tariff Obligation and the Hydro Benefit Replacement Scheme, which are essential measures for reducing energy prices for people living in rural parts of the North of Scotland. There are advancements in technology.”

“As a result, funding costs will be minimal without compromising the support provided.”

John Lamont, the Scotland Minister for the UK government, said: “The UK government wants to ensure that all consumers are treated equally, whether in Sutherland or Sunderland when everyone is concerned about the price of energy bills. The good news is that this payment will continue since it will shield households in rural Northern Scotland from the increasing electricity distribution costs in some regions.” Technical upgrades to the HBRS will be made through legislation tabled in the Parliament after £92.7 million in support was given through these initiatives from 2021 to 2022.

The Common Tariff Obligation (CTO), which prohibits energy suppliers from charging comparable domestic consumers different prices based on their location within the region, serves a similar purpose to the HBRS in the North of Scotland.

Citizens Advice Scotland‘s social justice representative, David Hilferty, stated: “We know that households and businesses in the North of Scotland continue to pay higher energy bills, so expanding this programme and the related protections is a positive step. Anyone concerned about their energy costs or costs, in general, can contact the Citizens help network for free, unbiased advice that is also anonymous.”

The UK government is required to examine the HBRS and CTO every three years. 

Most responses to a public consultation that was part of the most recent review agreed with the UK government’s plan to keep the schemes in place while making minor technical adjustments to the HBRS funding arrangements.

These technological advancements comprised: Addressing a doubt which may be interpreted as requiring funding to be recovered twice from electricity suppliers by removing a distortion that allowed some suppliers to avoid charges at the expense of others by adjusting support for inflation using the Consumer Prices Index, including owner occupiers’ housing costs instead of the Retail Price Index since the former is now thought to be a better measure.

Following the publication of the UK government’s response to the consultation, ministers will propose secondary legislation to Parliament to carry out the modifications, to have them take effect on February 6, 2023.

The more extraordinary expenses of transporting electricity to the region will continue to be shielded from all homes and companies in Scotland’s North.

Through the Hydro Benefit Replacement Scheme, £94.97 million will be made available to help households whose energy bills have increased due to these extra expenses, saving each home £60. In addition to the energy assistance programme already in place for this winter, the UK government is introducing legislation to make several technical changes to the programme to increase its effectiveness.