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SSE: iScotland likely to remain in single energy market with rUK

Scotland is "likely" to remain in a single energy market with the remainder of the UK in the event of independence, according to Big Six supplier SSE.

SSE said it has been undertaking work to manage the "uncertainty" and "increased legislative and regulatory risk" associated with the independence referendum.

It has concluded that "a single energy market in Great Britain would be the most likely outcome in the event of a Yes vote".

In a business update to investors, SSE said: "While SSE believes that a single energy market in Great Britain would be the most likely outcome in the event of a 'Yes' vote, it has long recognised that the processes of negotiation between the Scottish Government, the UK Government and the European Union following a 'Yes' vote would be likely to take time, be complex and may result in changes to the existing single energy market.

"The uncertainty associated with any constitutional change represents increased legislative and regulatory risk, of which SSE has to take account in making decisions.

"SSE has already put in place arrangements to ensure that it takes account of this uncertainty in its decision-making and is undertaking work to ensure that it has a clear view of the issues that would arise should there be a 'Yes' vote, and is in a good position to engage constructively with the Scottish and UK governments in the event of Scotland ceasing to be part of the UK.

"SSE's approach is to ensure that its operational and investment decisions continue to meet the needs of all of its networks and energy supply customers in particular, while safeguarding the interests of investors."

The independence referendum is one of a number of risks SSE is currently managing, a list which includes Labour's proposed energy price freeze, Ofgem's price control measures (RIIO-ED1), and a regulatory probe which is widely expected to result in it being referred for a full-scale two-year competition investigation.

It added: "More broadly SSE, in common with other energy companies, is exposed to a range of geo-political, market and other risks which it will continue to manage through financial and operational discipline.

"In respect of both the possible retail price freeze legislation and the RIIO-ED1 and competition study processes, SSE will continue to argue strongly for policies and decisions that are fair to energy bill payers and to investors and support the delivery of secure, lower carbon and affordable supplies of electricity and gas over the long term."

The Scottish Government's Scotland's Future paper states "a single GB-wide market for electricity and gas will continue with the current market trading arrangements".

But UK Energy Secretary Ed Davey insisted that the SNP's plan "goes against all commercial logic" and independence will not mean "a continuation of business as usual", in a speech to the Scottish Renewables conference last week.

Perth-based SSE (formerly Scottish and Southern Energy) is the UK's second largest energy supplier.

SNP MSP Mike MacKenzie, a member of Holyrood's economy, energy and tourism committee, said: "It seems that scarcely a day goes by without another of the No campaign's scare stories crumbling in the face of reality.

"The conclusion by SSE that it expects a single energy market to continue after a Yes vote, as set out in Scotland's Future, has left the No campaign once again looking extremely silly. No wonder they are slipping in the polls, as the Yes campaign gains ground.

"The fact of the matter is that Scotland's abundant energy resources are absolutely vital to keeping the lights on in the rest of the UK, which is why continuing to work closely with our friends south of the border after a Yes vote is simple common sense.

"Today's intervention by the energy experts is another major blow to the anti-independence campaign, whose ridiculous claims are just not being taken seriously by people in Scotland.

"No wonder Professor John Curtice said in today's Times 'The No campaign would appear to be at risk of becoming an irritating background noise to which nobody listens any more'."

Shadow energy minister Tom Greatrex said: "Today's announcement from SSE is a timely reminder about the risks and uncertainties posed by the prospect of Scotland leaving the UK.

"They join a growing list, from engineering firm the Weir Group to turbine manufacturer Infinis, who have warned that separation would cast doubt on the prospects of Scotland's renewable energy industry, which currently employs more than 10,000 people."

Scottish Energy Minister Fergus Ewing said: "We welcome SSE's views on a single energy market for an independent Scotland and the rest of the UK, which will be in everyone's interests.

"Affordable home energy and the ability of vulnerable consumers to heat and power their homes is of utmost concern for this Government. We welcome that SSE supports our intention to remove costs of vital energy efficiency measures from customers' bills and to meet these from central government resources.

"Recent UK Government changes to these funds are a poor substitute, which reduce their effectiveness while still leaving customers facing additional costs through their energy bills.

"While we welcome SSE's confirmation that it will proceed with investment in recently consented Beatrice offshore wind development, we are clearly concerned that uncertainty over future investment conditions and returns has led company to place other renewables developments on hold.

"Scotland's huge offshore renewables resource will have a major role to play in meeting future UK energy needs - but UK Government's half-hearted and delayed reforms to energy market are a serious threat to the vital investment required."

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