WITH the Highlands making a growing contribution to the UK’s sustainable and overall energy needs, there’s increasing bitterness over bills that households and businesses there face as winter approaches.

Criticism levelled at Westminster after Rishi Sunak announced a review of the UK’s net-zero 2030 commitments, both by First Minister Humza Yousaf (“abdication of leadership on a colossal scale”) and SNP Westminster leader Stephen Flynn (“PM has thrown in the towel on net zero”) is growing a head of steam in the Highlands where energy production and local energy costs are seen as highly disproportionate.

Flynn’s predecessor, Ian Blackford, the SNP MP for Ross, Skye and Lochaber, said Scotland’s many opportunities for green energy development – offshore, inshore and tidal – are not seeing communities being justly compensated.

He said: “This should be legislated and not a default position that developers consider. There should be compensation for communities on energy transmission, also.” Blackford added that people in the Highlands have every right to be angry: “There’s great potential to produce energy but we’re ripped off by the way the energy market works.

“We have high connection charges to [the National] Grid for power coming from the Highland region and you’ve then got the double whammy of the highest cost for electricity in the whole of the UK for the Highlands and Islands – it’s an utter disgrace.”

Amid the complex picture of the UK’s transmission and distribution networks, the most comprehensive paper from the system regulator Ofgem, covering 2015/16, showed household electricity consumption for northern Scotland is by far the highest per household – at nearly 5000 KwH – in the UK, while annual Highland household electricity bills were at the highest level, with even higher retail bills.

Ofgem’s report concluded it would opt out of national charges with a formula of revenue, incentives, innovation and output. It also noted northern Scotland’s cross-subsidy through the so-called Hydro Benefit Replacement Scheme, so that customers supposedly faced lower network charges.

But that report came before massive spikes in energy costs in 2022 attributed to post-Covid-19 price inflation surges, the effect of the Ukraine conflict and Opec+ oil price elevation. The UK’s energy price caps have seen a substantial lag feeding to customers, as noted for January to September 2023 by the Office for National Statistics.

Leading Scottish environment charity Changeworks has called for better deals for the Highlands. Chief executive Josiah Lockhart said: “Fuel poverty is disproportionately high in rural Scotland. Changeworks’s report A Perfect Storm: Fuel Poverty in Rural Scotland looked at the extent of this inequality, identifying several negative factors which, when combined, create a perfect storm of severe fuel poverty across rural Scotland.”

The report, based on 2019 data, concluded that 36% of Highland households were in fuel poverty. Rural householders face unique pressures, including a more challenging climate and a lack of support services. Lockhart predicted: This winter will see more people struggle to stay affordably warm in their homes.”

While the average household energy bill will drop to £1923 a year under the price cap, he urged greater further bill support. Additionally, he said: “The only long-term way to tackle fuel poverty and achieve our net-zero targets is by prioritising the retrofit of homes.”

A similar picture emerged for Highland businesses. David Richardson, development manager, Highlands and Northern and Western Isles for the Federation of Small Businesses, said: “All the evidence I’ve seen suggests that Highlands and Islands businesses are disadvantaged, in many cases paying a higher tariff for their electricity than those living elsewhere in the UK, and without access to mains gas that others take for granted”.

Higher prices were compounded by higher demand due to factors including inclement climate, poor insulation and colder temperatures.  Richardson said: “Our recent survey found Highlands and Islands businesses are significantly more positive about Scotland being an attractive place to start new businesses than those in the rest of the country – 53% versus 45%. In fact in the Highlands it was 57%.

“We want more pressure to be put on energy companies to renegotiate or ‘blend and extend’ contracts that were fixed at the peak of the energy price hike in the second half of last year. We also want more to be done to help smaller businesses reduce their energy usage through things like vouchers.”

Changeworks is alarmed by the UK Government’s change of direction. “We are especially concerned by the weakening of policies designed to accelerate an increase in the energy efficiency of our homes,” Lockhart said.

He welcomed a review of electricity market arrangements to improve an energy system that balanced decarbonisation, supply security and pricing.