ELECTRICITY giants SSE and ScottishPower are at loggerheads with their southern rivals over efforts to further delay reforms to a transmission charging system that penalises power generation north of the Border.

Amid thinly veiled threats that green energy projects will be postponed or cancelled if the reforms are held up much longer, both Scottish utilities have written to regulator Ofgem demanding they be introduced by next April and not delayed until 2015 or beyond, in line with mounting industry speculation.

The rules were originally supposed to have changed in April 2012, but have been held up by a combination of regulatory delays and efforts by power groups focused on the south of the UK to prolong their advantage.

SSE's letter was co-authored by 15 other companies and organisations with interests in renewable energy including wave power group Aquamarine, Orkney marine energy hub EMEC and environmental group WWF Scotland.

The letter, which has been obtained by the Sunday Herald, said: "We are aware that there is a debate on timing of implementation. Opponents argue that swift implementation does not give them enough time to plan for this change. Given the original Ofgem timetable had an implementation date of April 2012 and that current charges are varying hugely due to a raft of plant closures in coming years, this has no logic.

"With National Grid saying that they can deliver changes in time for April 1, 2014, this group argues strongly for that to be the implementation date. This will provide a fairer and 'fit for purpose' regime to enable investment to occur and reduce one tier of uncertainty that is holding up investment and growth."

Ofgem began its so-called Project Transmit in 2010, to consider whether to change the charging system. The system was introduced in the late 1980s to encourage firms to build power generation in the south of England, near the majority of the population, by charging progressively higher rates to generators further away (and progressively less to consumers in more remote areas).

However, this is not conducive to developing substantial numbers of wind farms or other types of green energy that work best in more northern areas with more natural power.

Under the current system, a company with a relatively small 800MW power station pays charges of just in excess of £20 million a year, whereas on the south coast the same station would receive more than £4m. Under the proposed new rules, the gap will narrow to a £14m charge and £1m payment respectively for traditional power, or charges of £6.8m and £0.8m for wind.

SSE partly blamed the charging system for its decision to shut down three-quarters of its gas-fired station at Peterhead next year, though numerous players have been mothballing gas plants because the fuel has recently become very expensive.

The firm also has substantial generating interests in the south of England, while ScottishPower is also active in Wales and northwest England. SSE is due to take a decision on its 600MW Coire Glas pumped storage hydroelectric scheme in the Highlands next year, which could be the most high-profile casualty in the transmission battle.

Energy Minister Fergus Ewing said: "The Scottish Government has long argued that the current charging regime is holding back renewable energy deployment in Scotland.

"It is simply unacceptable that changes to the charging regime as a result will not happen until 2015.

"We must deliver a more equitable approach to enable renewable generators to be charged according to output and actual use of system, rather than capacity or location. And we must deliver this swiftly."

Jim Smith, managing director of renewables at SSE, said: "Although Ofgem deserves credit for realising the current system is not fit for purpose, Project Transmit has been under discussion for nearly three years and has been subject to numerous delays.

"It is now time for swift action to prevent further investment uncertainty. National Grid has said it can be ready to implement the measures in April 2014. I now call on Ofgem to do the same."

A ScottishPower spokesman said: "We are in total agreement with the move by the other renewables developers. We just wanted to make the point to Ofgem ourselves."

An Ofgem spokeswoman said: "We are currently considering the options put forward to us by industry. Following this scrutiny we will publish a consultation on the impact assessment of these options before making a decision on whether to accept any of the options. Our decision on timing of implementation will be evidence-based."