 Fawr edrych, dim yn nhw'n cynghwyl. Welcome to this, the 8th meeting today in 2015 of the Economy, Energy and Tourism Committee. I welcome members,alkom guests joining us in the gallery and remind everyone to turn off or at least to turn to silent all mobile phones and other electronic devices, so that they don't interfere with the sound equipment. We have apologies this morning from Dennis Robertson and we are joined by Bruce Krofford i gael I. persecwt i'n ddwi'n cael bod Caerill Hilton er ffwrdd amdangosol ar Ymddangosol Llywodraeth Ffford i ddechrau tyg ar fynd yn fawr. Eitem 1 i ddweud ac i ddu i ddweud eich ffwrdd am ein bod yn y ddweud? Eitem 5 i am ei dyfodol. Eitem 2 i ddweud. Fawr yn gweithu eitem 1 o'r ddweud, fe fyddechrau mae'n gweithio argymaint trace, the common financial to etc amendment regulations 2015. I'd like to welcome this morning the Minister for Parliamentary Business, Joe Fitzpatrick. He's joined by Graham Fisher, our head of branch 1, constitutional and civil law division at the Scottish Government, and Chris Boyland, head of strategic reform at the Scottish Government. Welcome to you all. Minister, do you want to say something to introduce this instrument? Yes, thank you, convener. I'll try to be brief. The aim of the regulations is to allow debtors entering into any Scottish statutory debt solution to retain a contingency allowance. That's 10 per cent of their disposable income, subject to a maximum of £20 per month or equivalent. That's as a buffer against unforeseen expenses. The £20 maximum amount was discussed by and agreed by stakeholders, members of our common financial tool working group. The group agreed that this amount struck the best balance between the needs of the debtors and the interests of the creditors. The need to make this provision now arises because, as you know, the Bankruptcy and Debt Advice Scotland Act 2014, which this committee examined in detail, mandates the use of a single common financial tool for all statutory debt solutions in Scotland. The regulations being amended require the tool used to be the common financial statement, or CFS, which is available freely under licence from the Money Advice Trust. The CFS is due to be replaced by a new tool, the standard financial statement. It was hoped that this replacement would happen before 1 April and include a contingency allowance, so that could simply be built into the new tool. However, as things stand, the new standard financial statement won't be introduced on time, so we're making this provision now in order that the debtors can benefit at the same time as other 2014 act changes come into force. The move has been supported by stakeholders such as the Vice Scotland, who have called it, and I quote, a sensible step that will allow those paying off debts to be able to save a small amount of money each month. The regulations also take opportunity to make some minor technical clarifications and improvements, and I hope that that clarifies the purpose of the regulations. My officials and myself would be happy to answer any questions. Okay, thank you Minister. Are any members wishing to ask any questions in relation to this? Mr Brody? Thank you, good morning. Just very briefly, in the covering note, we had some contention around whether there should be one tool or two tools, but okay, we have the common financial tool. It says that you can add a contingency allowance to the CFT, under the CFT regulations, within defined limits. Who's going to define the limits? What limits are we talking about? Well, the defined limits. Sorry, Chris, do you want to take this? The limits are defined in the regulations as the amount that can be retained by way of contingency, which is £20 a month if you're paying monthly, works out at slightly different sums if you're paying, for example, if you're paying weekly, but those are the limits to which you're referring. So those limits were agreed by partners as being at that balance between the interests of the debtor and the interest of the creditors. That's why it's arrived at. One other question. There have been minor clarifications and corrections, minor, in response to the ICAS. Can you give an indication how minor those are? Yes, we can definitely say that those are technical minor amendments. A lot of them pick up minor typographical points. Part of the process in bringing forward those regulations is to bring them in early, so that there was enough time to make the adjustments necessary before 1 April. That's what we've done. We've also picked up some minor points that the Delegated Powers and Law Reform Committee have raised. We've made all those changes in time for 1 April. Any other members wish to ask any questions? No. In that case, we can move to item 3, which is the formal debate on the motion. I invite you, Minister, if you would, to formally move the motion that we approve the common financial tool etc. amendment regulations 2015. Formally moved. Formally moved. Thank you. Do any members wish to speak in relation to the motion? If not, I think that we can move straight to the vote. The question is that the motion S4M-12561 be agreed to or be all agreed. We are all agreed. Thank you for that. Can I ask members, if I can have your consent, to delegate responsibility for the drafting and publication of a short factual report to the convener and clerk? Is that agreed? That is agreed. Minister, thank you to you and your officials for attending. We now have a short suspension till I will change your order. Okay, we're item 4 on the agenda. The committee agreed that we would take some evidence on the issue in relation to Longannet power station in Fife and the press speculation that has been around the early closure of Longannet on the broader question of security of supply. And the committee has agreed that we want to do a broader piece of work on this, but because of the urgency of the Longannet situation, we felt a one-off evidence session specifically on this would be very useful and that would also help inform our wider discussions to come at a slightly later date. So I'd like to welcome this morning our panel of witnesses. We have Jim Smith, who's managing director, energy portfolio management, Scottish and Sonet Energy. Neil Clifthorough, who's the CEO of retail and generation Scottish Power. Mike Calviw, who's director of transmission network service from National Grid, and Martin Crouch, senior partner of transmission at Ofgem. Welcome to you all and thank you for coming along. Now, we have about 90 minutes for this panel. After that, we will have a second panel from Fife Council to talk about some of the local economic development issues that might arise from the closure of Longannet. But this issue is looking at the plant itself and some of the broader strategic issues around energy policy that affect its future. I think we're going to just go straight into questions. I would ask members, if they're asking questions, please to keep their questions as short and to the point as possible and if we can have answers that are short and to the point as possible. That would be useful in getting through the topics we want to cover in the time available. And because we've got a panel of four, I think it would be helpful if you don't all try and answer every question, otherwise we'll be here for quite a long time. So, I'd encourage members if they would direct their questions at a particular panel member and if you want to come in and respond to a question, address it to somebody else. If you just catch my eye, I'll do my best to bring you in as time allows. I wonder if I could maybe start and address this question initially to yourself, Mr Clifford. There's been a lot of press speculation over the past few weeks about the future of Longannet. Now, we've always known that the likelihood is that Longannet would have to close by 2020 because of a combination of factors, EU emissions, directives, carbon pricing and so on, but the speculation has been recently that the closure might have to be brought forward. There's also been speculation in the press about discussions that you've been having with National Grid. I want to hear from National Grid shortly, but I wonder if you can just tell me exactly where we are today with Longannet, what is the position, and given a lot of our concern, for the workers of Longannet, what future do they have as things currently stand? We're all a well-on-Gannet spent at the heart of Scottish generation for the last 40 years. It was actually opened in March 1973, coincidentally, a month after I was born. It has provided generation through that whole time. It is able to provide 40 per cent of Scotland's peak demand needs, generates over 10 terawatt hours a year and represents about 20 per cent of all Scottish generations. It's a pivotal plant right in the centre of Scotland. Over a number of years, the pressure on coal plants has increased as various policy changes have come in, at least of which have been things like the carbon floor price, which has forced a change in the economics of Longannet. We always expected that. Our plan was always to get Longannet to 2020, and at the same time, with Scottish Power, invest heavily in renewables, given onshore, offshore wind in terms of investment. We always expected Longannet to be phased out of the network, but what we're seeing in terms of the short term is a real pressure on the economics of the plant. It's a combination of a number of factors, the environmental changes that are occurring due to some of the European environmental legislation kicking in in April 16. The carbon floor price at £18 hitting the plant in terms of all its output, and an expectation will pay £170 million this year in carbon taxation. On top of that, we could say that it's all coal plant, England, Wales, Scotland face all those pressures. Longannet is no different from any coal plant. The difference Longannet has is that it's based in Scotland, which has higher transmission charges. Whereas a plant in the south of England will pay zero transmission or get paid for transmission, we pay £40 million, £50 million a year in transition. It's all those factors together that have brought a pressure on to the economics of Longannet, which has brought April 16 into a real focus. Just to pursue further a couple of points, the transmission charging regime that affects Longannet is something that we're well aware of as a committee, but there's nothing new about that. That's been in existence for how many years? It's changing just now in terms of some of the recent things, but the principle of it's been in existence for a decade. Scottish Power talked about it for a decade as well in terms of the points, but it's the transmission plus the other factors that are leading to the pressure on the economics. Right, so it's not simply transmission, although that is a factor, it's not simply that as driving the current decision? No, no, not at all. It's a combination of things. I suppose the key point that transmission comes out is that that's the difference between Longannet and the other coal plant. All coal plant face the same pressures with carbon taxation, European environmental legislation. Longannet is the only one that faces the heavy transmission charges because it's located in Scotland. Thank you for that clarity. Can I just ask you then where exactly are we now, because there's been speculation in the press that you've been in discussion with National Grid? Are these discussions, according to some reports, have broken down, according to other reports, are still on-going? What exactly is the position as of today? We've been speaking with National Grid for around 18 months and really in detailed discussion since September. National Grid at the moment are running a constraint management requirement, basically a proposal process, where plant that can deliver the services are bidding in to National Grid to provide those services from April 2016 until October 2017. We're in the middle of that process at the moment. Right. I'll come to Mike Calvi in the moment as I'm interested to get his perspective on all this, but some of the speculation in the press has suggested that if there's no satisfactory outcome from your point of view to these discussions with National Grid, you're going to bring forward the closure of Longannet. What can you tell us about what exactly is currently being thought around that issue? Well, we've been pretty consistent since really October when we didn't enter the capacity mechanism that if something doesn't change at Longannet, then the likelihood of closure is very high and that closure will be, you know, the way the system works, we basically have to announce about a year in advance of closure that we're giving up the transmission rights, which is the signal for closure. So effective act decisions now for the April 2016 time period and we've made that, you know, very clear in October in terms when we came out to that and obviously we've made it very clear in the tender documents to National Grid. So if you can't reach agreement with National Grid about this mechanism, what is going to happen to Longannet? Well, in terms of the, you know what, I'll perhaps read out what we said in our letter because that's probably the most clear, you know, it's important to note that in the event of rejection of our offers we'll be forced to announce as soon as it's practical the closure of Longannet power station by the end of March 2016. We believe that the closure will have serious consequences on security of supplying, on directing, in direct employment in the local community and beyond. Okay, thank you for that. I represent Fife, my colleague Hannah Hilton, who's here as the constituency member for Dunfermlyn and, you know, we represent the area where obviously there's a very real concern for the workers at Longannet who must be very concerned about these discussions about their future employment and the wider knock-on impact on the Fife economy. I hope you can reassure me I've got this wrong but, you know, is there an element of brinkmanship here? You're in discussion with National Grid, are you seeking to up the ante by putting some of this in the public domain? We've seen the energy minister making comment, we've seen the Scottish First Minister making comment, we as the committee are looking at this. Are you using the workers at Longannet as pollins in a game just to try and force National Grid to come to the negotiating table? No, not at all, not at all. We, if you know, if you visit Longannet, what you'll see around Longannet are statements like securing the future to 2020, you'll see pictures of staff saying, you know, having that, saying that, having that as a logo. A plan was always to get to 2020 and keep this plant, keep this plant going. We've invested in the belief of getting to that point, you know, we've invested £350 million in the plant over the last six or seven years. You know, it's a big old plant, it takes 30 million a year to keep it going in terms of capital investment and we've continued to commit to that investment. So, it's not brinkmanship at all, it's just an economic reality of the situation we find ourselves in with regard to Longannet. We continue to invest in Scotland, you know, £0.7 billion a year, we continue to invest across the UK, we continue to build our networks, we continue to build renewable plants, we continue to do all that within Scottish power. It's just that this plant that has existed for 42 years is in a very, very difficult situation economically. Thank you. I can maybe then turn to Mr Calvie from National Grid. I mean, you've had the position set out by Scottish power, essentially what they're saying is they might have to close the plant by March 2016. That means a lot of jobs are going to go in five, it's going to be a big gap in Scottish electricity generation capacity. They're putting the ball back in your court and saying, why are you, National Grid, not prepared to do a deal with them? Yeah, so thank you for inviting me this morning. It's probably just worth saying we're a system operator, you know, we're responsible for the real-time balancing of the Great Britain electricity network and for directing and coordinating flows across that network, and we operate the system to agree security standards, and we take that role very seriously, and we believe we are prudent operator that will always consider risks so that we maintain the extremely high levels of reliability that the system enjoys. We also have to recognise we are in the middle of a big energy transition as we move to a low carbon economy, so I absolutely understand the concerns around the potential closure along Gannett and the timing of that, but we have seen over 10 gigawatts of generation, fossil fuel generation, across the GB system closed in the last five years, and there's probably another five gigawatts due to close in the coming few years. So, you know, there is a lot of fossil fuel generation in similar situations. So, for example, barking combined cycle gas power station in London closed last year, six months ago. So, you know, I'm sort of setting this context that, you know, as Neil said, there are common pressures on a lot of generators. Clearly the issue with potential closure of Gannett that's been raised is it does pay a important role in terms of Scotland, and therefore because of the potential closure along Gannett and some uncertainty about Peterhead power station as well, we've been doing studies jointly with the Scottish transmission companies over the past 12 months looking at how we secured a network in a scenario where both Gannett and Peterhead weren't available. And ultimately where we concluded on that was at least until some transmission reinforcements have delivered, including the Western Link project, which I think you'll be aware of. We felt that particularly in order to ensure we can have stable voltage control in some sort of, you know, risky but not inconceivable circumstances that we wanted to procure some additional balancing services for 2016-17. We are in the middle of a tender process for that. As Neil said, we are looking for offers and we will, as we're obliged to, by licence procure the most economic option that's in the best interest of consumers. That process we're expecting to finish certainly by the end of March and hopefully in the next week or so, so I can't say what the outcome will be yet but we will ultimately choose what we think is the best option in terms of the most efficient for the system. We clearly, you know, can't comment about individual power stations and their decisions, that is a decision for power station operators. So, just to clarify, we will know your decision by, what do you say, by the end of this month? By the end of this month, yeah. Right, and that, just to put it back to Scottish plan, I mean you will be in a position to know by the end of this month whether or not Longanna has a future. No, that's correct. Okay, okay, when I bring in Lewis MacDonald and the supplementary and then Bruce Crawford. I wanted first of all to understand just what it is these talks are concerned with. I think we've got a little bit of an insight from what you have said but clearly Scottish power is not asking national grid to change the national system overnight. Presumably the conversation is that I guess you say a bid. I'm interested to know and I don't, I recognise my Calvi said he cannot comment on individual power stations but clearly SSE are here and I can only assume that we're talking about a bid that involves the two companies and the two power stations which currently exist. I'd therefore like to understand from national grid but also from the generators what the consequences are of the decisions that will be made in this additional balancing requirement. There is existing power from both stations on the grid at the moment. Is it the case that the additional balancing requirement is essential to the economic feasibility of both stations and if not what's the difference? What we have identified is that for a scenario in 2016-17 where there may be low or no availability from Longanish and Peterhead that we would need at least one balancing mechanism unit so a four or five hundred megawatt generating unit available for the world-fied voltage control services so effectively that is what we are asking people to provide. As you said it is sort of interesting because we are bidding for a requirement that might actually be provided naturally by the market already but given the statements you've already heard you can understand why we think it's prudent to go and procure and if you talk to SSE there are some sort of uncertainties and permutations about exactly what's going to happen to Peterhead and how that relates to their carbon capture and storage project. So we felt it was prudent. There is actually a third party also in talks about a innovative new provider of services so we are considering three options and we are assessing them against a number of technical and economic factors and we'll come to our decision as I said as soon as possible but recognising the timescales for decisions we have undertaken to do that by the end of March and I'm hopeful that we'll be able to conclude the process in the next week or so. I can confirm to the member that SSE has participated in the process for Peterhead as people would expect. In terms of what does it mean for Peterhead whether it wins or not a contract there are a number of permutations for Peterhead in the future. People should understand that at the moment Peterhead is effectively commercially out of the market. We reduced the tech of the station down to 400 megawatts back in April to reduce costs just to reinforce what Neil has said. Really all thermal plant in the GV system is challenged economically at the moment so that was purely cost saving. We're investing £15 million this year which will allow us to operate below 400 megawatts which we can't do at the moment and that will be available for the winter. The other factor is obviously carbon capture and storage. We've been working with Shell for over two years in that project. The engineering studies are coming to a close and it will now go back and Decker is now looking to get state aid clearance from Europe for the project. If the project follows the timetable that is planned, then a financial investment decision on that project would probably take place around the year from now. Clearly that would secure one unit at Peterhead for the next 15 years beyond that. The plant is currently out of the market because it's uneconomic. We've had to reduce tech. In the past we've bid Peterhead in to provide services to national grid over the summer. We had a voltage contract. This winter pass we bid for a strategic balancing reserve contract where it was there to support the grid if needed. Indeed, national grid has an option to extend that contract to next winter if they so wish. There are a number of potential outcomes for Peterhead. Overlaid on top of that is the economics of thermal generation. At one point Peterhead, although participating in the capacity market option for 2018, didn't actually receive a contract because the price that we were looking for was higher than the price that it cleared. That's the truth for about eight gigawatts of thermal plant in the GV system. All that plant will face a decision for the plant that still has tech about whether to give it up. As Neil Smith said, you've got to give a year's notice. That process is a bit later this year because of the JAR and project transmit. Some plant will probably make the decision not to, but I can't comment what others will do, but we will only just need to wait and see. I just wanted to understand from Scottish Power because what I think we understand is that we're talking about an additional requirement from national grid which you are bidding for, presumably, or is what you're saying that you are uneconomic already and that without this additional contract you cannot proceed? That's basically correct. A coal power station has a lot of big fixed costs. We obviously operate gas plant as well and it's much more you can manage the cost down in a much easier manner in terms of the variable cost level, but a coal plant has a lot of costs. We have to spend 20, 30 million a year in capital. We have to spend 50 million a year in operating costs. You obviously need to recover that amount of expenditure. We're bidding into this tender to try and effectively get extra revenue to cover some of those costs. What's being asked for in the tender is 350 megawatts of voltage support. Maybe just to explain to the committee for a moment, and then it might be better doing it this, but there's two sides to managing a grid. There's managing the demand and supply side, the quantity, and then there's managing of the quality. Is the voltage correct so everybody can use all their electrical appliances? Is the frequency correct? This contract effectively is asking for 350 megawatts to support the quality of electricity on the network. Therefore, long and out of the moment is 2260 megawatts. There's got to be change at the plant even if we win the contract, but that's what we've planned for in terms of our bid, our bid international grid. Significant reduction? It would, yes, yes. In that context, and finally to that point, would that therefore have employment implications even if you were successful? It's the difference between... There's 270 people work at Longanna. Obviously, that's the direct employees for Scottish Power. There's a lot more when it comes to our suppliers. The plant closing in its entirety has the major impact. The plant staying open with two, three units, whatever, then it's much easier to manage that through the usual early retirement type schemes and voluntary type schemes. That's what we do and that's what Scottish Power has always done. We've always managed. Some of those people will want to stay at Scottish Power, working in networks, business, work, whatever, and we'll manage it like we've always done. I've had the opportunity to be at Longanna a couple of times, so I know it reasonably well. Thank you for being here to give us evidence today. Given the potential timescale issues in closure for Longanna, obviously the importance of longer-term resilience and security is something that the committee is interested in. Can I begin with a strategic high-level question so that I can get some clarity on my understanding here? I'm not sure whether it is to Micah or Martin, but which organisation in the architecture of transmission and generation of power for electricity in the UK has formal responsibility for security of supply? So, there's a number of aspects of security of supply, so I'll try to give you as clear an answer as I can. The overall responsibility of security of supply sits with the Secretary of State of the British Government for the overall system, and it's very clear. For example, we've seen with electricity market reform and the capacity mechanism, the British Government has implemented the capacity mechanism in order to ensure there is sufficient overall generation capacity to meet demand across a GB system. National Grid and System Operator, though, we are responsible for the real-time operation and effectively balancing the network, and we work to some defined security quality and system security quality standards, SQSS. So, we effectively within that overall framework are obliged to make sure that the system will balance and the system can be operated, and the quality aspects that Neil was talking about so that we can manage the volts and manage the frequency can be done, which is why, therefore, if we see an issue on a local or regional level where maybe the overall system has enough generation, but there might be some concern that in certain conditions there's not enough generation available in a certain locality, we will then take action such as contracting in the short term and probably in the medium to long term prompting the investment in further transmission assets to make sure that the system is robust and secure. So, effectively, sorry about that. If I can just add to that, I agree with what Mike has said, but in essence we rely on generators responding to signals in the main market signals in delivering security supply so that there's a really important role of the market in this. Our role as off-gem is both to look at the market rules and make sure they're appropriate so that generators are responding to those signals. On occasions when we, often working collectively with DEC and with National Grid, consider there are issues, as has happened in the recent past, we will look to provide additional tools to National Grid to enable them to deliver security of supply, including the supplementary balancing response that was mentioned earlier. So, there are examples of this working in practice. It's clear, though, that DEC has the responsibility for security of supply and that doesn't lie either with National Grid or off-gem. In some senses, it's a combination, because DEC is overall responsible for the policy. Who has statutory responsibility for security of supply? That's the question, I just need absolute clarity on. The policy responsibility is with DEC. The day-to-day operation of the system is with National Grid. We could come to black-start issues, because obviously, if Longanot is no longer there, it begins to raise questions on it. My understanding is that the black-start situation is when all the everything goes down, not impossible, unlikely, but not impossible. But everything goes down, we get into black-start. The first thing that works is that it's pump storage. It then gives the power to Longanot, and Longanot then powers all the other power stations, because they need enormous amounts of power to operate on the wrong right. What happens when Longanot is no longer there? Black-start, as you said, is something that we plan for, even though we hope we never have to do it. It is the ultimate insurance policy. We effectively have a portfolio of stations that we contract by black-start services across the network. We did a big exercise about five years ago for the UK Government Energy Emergency Executive Committee, E3C, looking at black-start policy and basically agreed an approach where we would make sure that we have at least three black-start stations available in each region of the country. For this purpose Scotland is a region. Actually, in Scotland at the moment, we have four contracted black-start stations, including Caracann, and neither Longanot nor Peterhead are contracted black-start stations. As you say, though, that our black-start plans, as you conceive doing a black-start and conceive the worst case where you've lost the entire GB network, you have to vet the piece of network back together bit by bit, and having large flexible or reasonably flexible plants such as Longanot available does help you. The answer to your question is if we don't have Longanot, we would have to develop alternative strategies. It's quite hard to predict how a black-start would work in practice. We have a number of different strategies we would apply, and inevitably if we have one of Longanot and Peterhead, we think we can probably black-start Scotland within an oval GB black-start in similar timescales to we can at the moment, which is a 12-24-hour timescale. If neither Peterhead or Longanot is available to help with black-start, it probably would extend the timescales because we may only be able to do certain amounts in Scotland in terms of developing a skeletal network and then have to rely on the wider GB network or coming up together. It is something we are considering. We will be updating our black-start restoration plans as the evolving generation pattern develops, but it is probably worth saying that different parts of the network have different amounts of generation connected. The parts that have more generation connected inevitably will probably come back quicker in a black-start. The last thing I should say is that this is a definite worst worst case. We have never seen a full system black-start. The last major black-start event was the 1987 Hurricane, and even that was just part of the system. In a scenario where having to do a black-start for this part of the system, because you can effectively build off what's already there, you can do it much quicker anyway. We really are considering the worst worst case, which is a full system shutdown. That is our insurance policy. I think that it was quite rightly described that way. We have just heard from Neil that potentially Longannock might not be there after March 2016 of this contract arrangement thing. It doesn't work out. Can I ask Jim Smith on the circumstances? If Longannock is not there and Peterhead is a fallback, has Peterhead got the capacity once Crookin has given its power to start up the rest of Scotland? Well, I think that, as Mike Smith said, there are other stations beside Crookin, as well as Foyre's pump storage scheme, and also Slyw provide black-start facilities. If I understand that it needs that huge generating capacity of one of the stations immediately after Crookin and Foyre to start up, to put it into the next station, to give it their boost, to help the newt to get back up, for instance? Mike is the expert in the network of black-start, but I think that he is right. He needs inertia on the system of a large generator to allow him to start up quickly, but if he doesn't, then he would need to rely on interconnectors from other regions of the country. Okay. In that case, is the interconnector from the rest of the UK strong enough to provide the level of power required in a start-up situation, a black-start? Yes. The debate on black-start is a timescale issue. We can always bring the system back, but we absolutely recognise in this what would be clearly an awful situation, bringing it back as quickly as possible would be what we would be aiming to do, and we absolutely can black-start Scotland with effectively nothing in no Scottish generation by using the interconnectors to the circuits linking it to the rest of the network, it would just take longer. That's the issue with black-start is purely a in this extreme scenario, how quickly can you get it back, and we recognise that if both Longanet and Peterhead aren't available, a black-start will probably take longer in Scotland. Historically, it's important to realise that the transmission network in the UK was effectively at England and Wales network, a central belt of Scotland network, and a north of Scotland network, and therefore the black-start plan is related to each of those transmission networks, so SSE had the plan in terms of foyers, and the central belt of Scotland was effectively, Crewerkin came on, water came down the hill, there's a line that goes direct from the transmission line that goes from Crewerkin to Longanet, Longanet comes up and that then repowers the network. So interconnection within black-start is quite a new thing in terms of the model, but that's been effectively the plan for 40 years. It's never been used, thankfully. It got tested. Actually, in November this year, we had Crewerkin totally without power for the first time I think for 20 years, where we took it totally down and national grid tested that, and we did a full test of Crewerkin to Longanet I think five years ago, as Mike said, as part of the overall UK plan. But that's been the route, so we effectively get a payment to you providing black-start services at Crewerkin. Longanet's just been there, I think, part of our connection agreement for Longanet includes the provision of some of those services, albeit the contract for black-start is directly with Crewerkin, and that's how it's worked for many, many years. The final question is time scales, because obviously if Longanet's there, it can be done relatively quicker than if Longanet's no longer there. What do we mean by taking longer to get it to get restarted if Longanet's no longer in the system? So when we did the E3C study, we effectively looked at the sort of distribution of how quickly to get 60% of GB demand back, and in the best case, it's about 12 to 13 hours, and in what we call a challenging case where things don't go as well as we might hope it might take anything up to 36 hours. Looking at Scotland by itself, we probably think that we can do Scotland in 12 to 18 hours with the current black-start stations and with Longanet and P-Ted available. If neither of them available, it probably pushes Scotland by itself to a sort of 24 hours plus, so it's still within the envelope of the overall GB plans, but it is clearly likely to take longer than it would if those stations were available, and that is just because, as Neil says, you know, you do benefit from having a large plant available in terms of how it would actually work in practice. I think that Mr Grover's question asked me earlier on properly that Peterhead can provide that role if Longanet wasn't providing the role to support the black-start process. Finally, on the resilience issue, voltage stability of Longanet is no longer there because I understand not only peak winter demand at 40%, but it's called on significantly in the summer for the purposes of voltage stability. How do we ensure voltage stability in the Scottish network if Longanet's no longer there? Well, voltage control, voltage stability is the reason why we are going through the current procurement exercise to buy services, so for 16 to 17, we absolutely recognise that we do need someone to buy additional services in order to manage. It's a low-ish risk, but we felt it was prudent action. In the longer term, there are investments in the transmission system being taken forward, which will help. Particularly, we've worked with the Scottish transmission owners, Scottish Power Transmission and Sheet Transmission, to identify a number of reactive compensation investments, and they are due to come on stream by 2017. National Grid itself will be doing some similar investments in the north of England, which will also help. Western Link will also, by itself, doesn't help with voltage control, but some of the control equipment at Hunterston will actually also provide a voltage control benefit. So, there's a number of transmission investments which are in the pipeline, which effectively we have commissioned in order to deal with the scenario where Longanet and Peterhead aren't available. Of course, what they're buying is the additional apologies. I'll come back in if I get another chance. Thank you, Mr Crawford. Just to continue this before I ask my own questions, I'm keen to understand if we're in a situation where Longanet and Peterhead aren't available, and I think Mike Yu said we need to depend on the rest of the UK, but the rest of the UK is a net importer of electricity from Scotland, Wales, France and Northern Ireland. The interconnector from France and the Netherlands appears to be working at capacity 24 hours a day, so how much spare capacity does the UK network actually have to meet these situations where, say, Longanet and Peterhead aren't available? It's a very good question. I think when you look at these things, you have to recognise that we're moving to a world where traditionally there's been a pretty consistent large export from Scotland into the rest of the GB network to now that Scotland is so much an intermittent wind generation on it, that there will still be, probably for the majority of time, a large export from Scotland to the rest of the network. 2013, I believe, is that right? More wind generation is connecting continually in Scotland, so this will increase, but there will be periods clearly when the wind's not blowing in Scotland that will increasingly start to see flows from England up into Scotland. That sort of dynamic is probably, I operate an entire GB system and we're used to that sort of dynamic, so the power flows where it will and the fact that sometimes it flows one way and sometimes flows the other way, that's pretty typical. The relationship is that the interconnector 90 per cent of the time the electricity flows south, 10 per cent of the time the electricity flows north. That's probably about right at the moment, but I think going forward that will change and we'll see the amount of time it flowing north will increase, albeit I still think you're right, it will still probably flow south the majority of the time. So I think the question you're asking is when the power needs to flow north will there be enough? Ultimately that is a question almost by definition, there will be enough as long as overall GB has sufficient generation to meet its overall security standards. That is what EMR, the capacity mechanism is designed to do to ensure that GB as a whole has sufficient generation capacity and in the short term until EMR comes on stream in 2018 we have these new tools that Martin talked about, supplemental balancing reserve that we used last winter where we procured some additional generation across GB including Peterhead as was mentioned earlier and we are currently actually out for tender looking at whether we need to buy anything more for this winter. So we are reasonably confident that across GB there should be an overall enough generation to meet demand even at periods where the wind's not blowing and therefore if there's enough across GB then there will be enough in order to send to Scotland if it's needed as long as there's sufficient family capacity and that's effectively what our analysis work has looked at. You said the word should a few times there. What would be the spare capacity? Would it be right and say that it's as low as 4%? Currently, for last winter it was actually 6% and just to be clear what I'm talking about, the way we define spare capacity is we look at something we call the deraided margin. So we look at all the generation on the system, we apply a deraiding factor that takes into account typical availability at peak. So coal and gas would particularly look at 85% to 90% availability. Wind, we've done all the statistical analysis and we recognise actually getting no wind anywhere in the network is very unlikely so we've worked it out and it's typically a factor of about 15% or 20%. We allow for wind and so we do all of that, we derate everything and then we quote the difference between the derated generation availability and the forecast peak demand. That's the 4% number you saw talked about with actually once we did our SBR actions was 6% for last winter. So as it happened last winter hasn't been particularly cold, underlying demands are probably quite being actually quite slightly lower than expected so we didn't actually use any of our SBR contracts that we use. So even though there was quite a bit of concern going into winter about how tight the margin was I would have said that the winter was reasonably comfortable though we are never complacent about security. So moving on to my own questions I want to ask about just to fully understand the situation about generating capacity. What is the current generating capacity in Scotland and what is the peak demand in Scotland? The current generation capacity is about 11 gigawatts and the peak demand is 5.4 gigawatts. And how much generation capacity is currently contracted to connect in Scotland over the next few years? I believe we have 14 gigawatts that's got transmission contracts. So you know given that we could lose Longanna and Peterhead and accepting the black start argument that we heard from the generators and does that give Scotland an off headroom to meet its peak demand? I think generally yeah I mean I think I think the condition we've been focusing on is because a lot of that certainly the new generation coming on is wind therefore the concern is yeah that's fine most of the time what about when the wind is not blowing and it has to be the wind not blowing across the whole of Scotland which you know is is is I think possible but you know clearly pretty unlikely. So that's why I probably regard the work we've been doing is reasonably prudent we've been analysing what happens if there's no wind and there's no Peterhead and there's no Longanna it. So I think you know what we're saying is in the short term we need one additional unit once we've made the transmission investments that we've discussed and agreed with the Scottish transmission companies then I think you know there should be enough generation in Scotland to meet peak demand allowing for the capability of the transmission system. Moving on to Longanna itself is there an alternative method that Longanna could be used to say use wood pellets for instance and what effect if if that transfer was able to take place would that have on your operating costs? Well we did some biomass trials about six seven years ago and there's two I suppose there's always those two key things that we found in that the first was just the the technical combustion impact of the of the pellets into a 40 year old station was it was quite volatile you know it was it was difficult to manage the actual combustion there was technical problems and obviously there's word to get all the wood pellets from you know it's a big station it's five million tons of coal a year and all those trains going in and and where do you get the wood pellets from to burn it and that you know that was a major sort of supply chain problem that we had with with biomass so we have done trials in the past but it's just it's just not a you know the plant as I said earlier that you know the plant is 40 years old so it takes a lot of investment to convert anything you know we spent 200 million 250 million reducing the sulfur output from from the plant and that was a combination of the new technology you know bolting on to a very old plant so economically the biomass never never really sort of worked for for long enough so moving on to the point that Scottish powers been making about transmission charges last week you had a press release that says there needs to be a fair and level playing field with the rest of the UK in order to develop new power generation in Scotland no other country in Europe has this unfair locational based charging system for power stations and we need a fairer system for Scotland so so what is the what is your understanding of the charging regime elsewhere in Europe and why are we currently got this charging system that seems to favour the south of the UK the UK system is a is a locational based system which effectively if you've got effective looks where the demand is in the country where the demand's high and charges plants less if they're close to that demand and more if they're a distance from that demand in a new nor would that demand be it it's in a UK context so it basically imagine a graph across the UK who's consuming the most then the south east consumes the most and it it differs so there's no there's no sort of local aspect to any any of that transmission charge in in other places in Europe in in in Germany and Belgium and Netherlands they they operate a a flat transmission charge more of a i suppose what you call a postage stamp transmission were no different from you know sending a letter from the north of Scotland to London is the same of sending a letter within London then the the transmission charge is the same across the country now there's obvious benefits to that in the in the plank and locate anywhere in that country and there's an offset to that in so much as you know the transmission operator you know can't be building lines to the middle of nowhere and and bringing them into demand and spending a lot on that transmission network but but countries have made different decisions on that in in the past and it's actually coming into focus more in the UK now with the increase in interconnection because effectively the plants in the UK that maybe have different regimes whether it be transmission whether it be carbon floor price differ from the plants in Europe that are generating to interconnect across the UK where they maybe don't have those transmission charges maybe where they don't have the carbon floor price impact and so there's a there's a lot of thinking in the industry about that problem because everyone wants more interconnection it's the best way of frankly managing energy generation across Europe is to to have us moving energy to the places where it's needed but it's important that the generation plants across Europe operate on a level playing field with each other in a competitive sense and and that's the you know that's a debate that's going on in the background all the time in in the UK just now is how to level up that playing field just from our perspective to give some context around transmission charges you know national grid set the transmission charges and we approve the methodology so we're we're very closely involved in that back in 2010 we started a major review of how transmission charges work looked at the pros and cons of of different systems and what we found through that was that the the is clear value to consumers throughout GB Scottish consumers English and Welsh consumers from having a system where generators and consumers aren't necessarily charged on just where they're located but are charged based on a an estimate of the costs that they impose on the transmission system so they're paying the costs that they lead to it's intended to be very reflective of the costs of the system that's what we would see as a as a fair system the system we have proposed coming out of that review which we decided on last summer will reduce the costs to most of the generators based in Scotland compared to what we have in the past so the only change that's occurring really around that is a reduction in charges compared to what they've been in the past clearly it's still true that generators in Scotland pay more than generators in England just as consumers in Scotland for transmission pay less than consumers in England for for transmission yes overall not overall for if you include other network charges which are calculated on a different basis that's absolutely fair it's also not it's true that the exact system we have doesn't exist elsewhere in Europe it's certainly not true to say that um other locational charging systems don't exist in Europe I think that's misleading the CMA who we've referred the whole energy market to you have been looking at this recently there um one of their reports says the main Australian market the Nordic market markets in the most of the northeast usa texas and california are all examples of markets that have adopted either zonal or nodal i locational approaches um to wholesale markets and we've chosen to do it through transmission charges but all these other markets also the Italian market has locational charges so there's there's plenty of other markets most of the markets that have seriously reviewed their electricity market design have elements of locational charging where generators or customers based in different parts of the country will face different revenues or different charges we've chosen to do it in a slightly different way through transmission charges you can argue about the pros and cons of different systems but our review over the last few years has found that some form of locational charging is definitely in the interest of consumers overall um you know some generators will clearly find it's not in their particular interests um but but our focus really is what's in the best interest of consumers we'll need to move on i appreciate these are complex issues but i'm also conscious of the time and i've still got a long list of members to come in so if we can try and keep questions and responses as as sharp as possible that would be helpful check ready good morning a i was kind of surprised first of all we seem to have an endemic in here that nobody has any responsibility for the security of supply statuure so that might be for another day but martin i want to off gem we have a quote here says it's very difficult to accurately estimate the level of security of supply that will be provided by the market now market creates demand and we're talking about the supply and last year we met ashley i think julian from national grid who suggested there was a 4 capacity you've updated that 6 but totally unable to tell us what would what the plans were in terms of the capacity guarantee that we'd have for the coming winter why is that so the government has set out a security standard that it expects to be met which is three hours loss of load expectation that's clear and that's now set out from deck very very clearly we have over the last few years and national grid has as well been providing forward looking estimates of the the margins going forward we've always felt that this winter just gone and the winter coming up are going to be the the areas that we were most concerned about so looking forward to that it is difficult to know which individual generators are going to close and which are going to open the generators are quite cagey about announcing this well in advance as you've sort of seen by i think julian i'm not i'm not sure i can't remember which of the two was that in the event of going through your calculations which i'm not very interesting that they would have to go and negotiate through the sbr the opening of plants down south why so the sbr mechanism is intended to deal with the uncertainty that we face looking forwards and provide a mechanism for national grid to contract with existing providers of generation predominantly for this coming winter at the moment when we're looking ahead it looks to be broadly similar to the winter just gone however we are conscious that there are numbered generators that didn't get contracts under emr in the capacity mechanism 2018 that therefore there might be some question about their future and when they might close now we would hope maybe that they're you know people have maybe you know and and i've certainly had some indications i think centrica announced that they will be closing to their plant and with a with almost immediate effect um so i think as as martin says the key issue is we don't you know it is a market we don't know what individual power station operators are going to do 70 people on the streets potentially because you don't know what you think the maximum or minimum demand will be next winter we know what the demand will be there is uncertainty about the supply once that uncertainty is resolved we will complete our tenders for sbr which will address any concerns about the overall national plant margin and the existing process we have going on i think will address any any any additional balancing service we need for voltage control or other system services so i you know the the the only uncertainty is an uncertainty about what generators are going to do once that uncertainty resolves and we will very clearly decide what action we need to take and we have the tools that we need to to to to take the action to secure the network okay we had to we had about interconnectivity in interconnectors what's the situation in the northern island connector is it working and how often if it is how often has it been out of action this year um i don't have the precise uh figures for how often it's been out of action but it is broadly working and uh i think it had a period a few years ago where it had had quite a few technical problems but it's broadly working and uh is used regularly what does broadly what does broadly working mean it's running at a lower capacity than its full design capacity due to the the technical issues but it's it's been operating at that at that capacity for a period i think the um you know the plans to to bring it back up to full capacity are a matter for the operator of of the link um but it's it's something i think they're looking at yeah somebody else's problem no no well it's it's it's a matter for the operator of the link as to how they run that link that's their business um but it's been operating i think at 250 megawatts um for the for the past period of time generally it's been exporting to northern island so it's um not all of the time it's been flowing in both directions but it's um i think that the planning assumptions when you look at security supplies are that often it would be exporting rather than importing it's not necessarily helping provide more electricity to scotland okay one last question i'll make in here we're talking about i think 40 million pounds a year is it was in terms of the connection martin nationally it made 3.7 billion pounds operating profit last year it also invested very heavily in your operations in the states has long on it just fallen down the whole priority list as far as national grid is concerned ultimately decisions around power stations uh and when you know what their future is is down to those power station operators we as martin has said have to do trans do transmission charging effectively against the methodology that off-gem has approved and martin's explained about how that's been reformed so um yes the current transmission charges for long anet are just over 40 million pounds once transmit comes in assuming that the um it gets through the judicial review um in 2016 those charges are all dropped by a third so to probably about 28 29 million pounds um i i absolutely understand nil's comments which is still that puts him at a disadvantage to some other coal-fired stations in other parts of the system so but that is a consequence of the of the locational system that we're we're using i think it's important just to um just on on that because the mics mics right in terms of the reduction but the charge was going up anyway under a pre transmit model so that's the pre the reform that's been done okay so let me just give you the numbers that would be charged in terms of the actual pounds and show the comparison and this is for 2017 2018 which is um with the transmission upgrades so long anet with the reform is going to be paying 52 million in 17 18 without the reform it would have been paying 68 million so there has been a reduction with the reform of of the numbers there but the the the cost was escalating anyway um a similar plant in the centre of london would receive a payment of nine million um in terms of the current mechanism and that's no you're not going to build a coal plant like that in the centre of london so you know that you know it would be outside of london which would increase that that number a little bit towards zero but those are the differences and then and then just again to add to that in terms of a wind if you've got two gigawatts of wind in in a similar zone that would pay 32 million and again you know my articulated very well the the change that has occurred for renewal renewables under that um legislation so look those are the types of numbers that we're talking about in terms of the the differences and that's the current model and the transmit assuming long anet has got 2.2260 megawatts at 17 and 18 yeah i just might be an idea to put a coal power power station in the middle of london just to see exactly what would change your charging in my experience it's ridiculous that your your illicit charge for further distribution than you have for production and distribution on the doorstep just absolutely nonsense i'm not sure that was a question there is no it's okay okay okay we are here to ask questions right okay thank you convenient good morning um apologies if this sounds like i'm going back a wee bit in the conversation but i just wanted to understand a little bit more about the the contract that's being considered in terms of voltage control um the long anet peed ahead and i think you said a third better which is um i'm not sure until we finish the process we can reveal who they are but it's it's someone with a sort of innovative new new idea that they're proposing proposed in develop based in scotland yeah okay it seems odd that you can confirm two of the betters but not three well i think i think i think two of them existing generators that the third one would be a new generator okay um as i understand it that is a a short term piece of work that's required to deal with a a one in six hundred year weather event is that is that an accurate description of the reason why this this is being done yeah um effectively we we we've been doing lots of this studies to think about the the risks to Scottish security supply in a scenario with no long anet and no peed ahead and uh let's say that the key focus is voltage control one of the questions we were asked and uh we've been doing lots of work uh with Scottish government and Scottish government officials on this is to try and sort of explain what the size of the risk is and effectively we you know calculate the sort of risk we're dealing with was about a one in six hundred event because once you allow for the fact that you're dealing with low generation availability low wind and in order to actually get the problem you'd need to get a probably a double circuit transmission fault at the same time you get to this very low probability so um effectively we are you know the risks we're dealing with you know we do have this very very high reliable system as as as I think everybody expects nowadays that you know they expect just electricity to always be there um so you know we have to think about these extreme risks and there's this low risk which you feel needs to be insured against let's let's describe it that way uh is an ongoing one or one that only exists until uh some of the wider grid upgrades like the western link have come into into being it will get a lot lower once those those grid upgrades come in and therefore we believe that along with those grid upgrades coming on time um then we don't believe we'll need any more services to meet the risk so just turning to to mr clithero in in that context even if you were to win this bid it gives you a year or two's grace no more than that is that is that fair um that that is further the contract that's gone out is for is really dependent on the completion of the western hv dc so the current contract is for 18 months with a 12 month extension so you know 30 months from april 16 would be uh the expectation and that still though takes us beyond the period at which uh longanna if it's still operational would have to meet the new software dioxide standards under the industrial emissions directive is that right um yeah the nitrous oxide yes uh and are you are you at that point well the the the new environmental requirements start in april 16 so um to say that by that time you will comply with them um well we have to comply with them so and there's two ways of well the only way of complying with them is to stay below your your NOx emissions in terms of how much you produce you've got two options to that either you produce less or you um invest in new technology so you can produce more with less nitrous oxide output so you know at longanna we have invested in a couple of systems on one of our units to reduce a nitrous oxide output from generally about 550 milligrams down to 350 milligrams 300 milligrams to have the plant with full full full output up at 12 13 terawatt hours it needs to be below 200 milligrams and there's to be another level of investment in that and so you would need further investment that you haven't yet made in order to to move from the the current directive standards to the the new directive standards that are for full output yes for full output yes so so you haven't made that that investment to comply with that well we've made we've made the obviously the first stage of the investment was the investment in sulfur dioxide reduction which we've made we spent 250 million on that we've made small investments at the moment in nitrous oxide which have started to have an impact to justify the full investment to get below 200 which which i might have not not many coal plant in the UK have done um you know the the economics for the plant would have to be there for the rest of the decade and into the next decade and because of a combination of factors that i talked through earlier in terms of the the carbon floor price doesn't change with that the transmission charges don't change with that then that those economics are not there to justify the full investment so we can still you know under the current if we did no more investment we could still output just just under six terawatt hours and then we'd step up that investment in terms of what's there no i mean i think we all pretty much everybody would accept that ongoing coal capacity of that scale isn't compatible with the UK or Scotland's climate change objectives anyway so that's that's clearly not going to happen so you're saying that you're not intending to put in that investment in order to meet that those new emission standards in terms of full capacity because of that that context so we're still talking about when not if? Well absolutely we are talking about when not if and the the plan for Scottish power has always been to trying to get to 2020 with this plant because we feel a balanced portfolio across not just the UK but our own fleet so we're in as you know we're a massive investor in renewables and we continue to invest in renewables um we've also got planning permissions for two gas plant that the economics need to be right at one in England one in Scotland and obviously Longanna we always expected that the you know toward the end of the decade that this plant would either run out of its bubble under IED or something would change that would enable us to invest and keep it going but there's a new level of environmental legislation 2023 which is probably the maximum you can get to with a with a coal plant at the moment but yes is the direct answer to your question in terms of you know what we're talking about here is a three to four year period to the end of the decade and just finally returning to to Mr Calview as well the the the context of those transmission upgrades the western link and others and potentially additional links which haven't yet been been approved across the north sea that that longer term context really changes the the question about the the need for ongoing thermal generation in scotland at all doesn't it there wouldn't be from a security a supply point of view an engineering need for that kind of thermal generation in scotland I think you're right that as you build more transmission and you know western link obviously the the need case is all about exporting Scottish renewables it has a sort of it has a sort of secondary benefit that it can therefore also help with importing to Scotland but as you build more transmission you become less you know reliant on local generation you know Scotland is still you know got an awful lot of generation in it and a lot planning to connect so but you know certainly if you look across a GB system where you've had areas of the network that have been very reliant on local generators in the you know what's intended to happen in the long run is as those generators become economic or you know at an age where they it's not economic to keep them running we've generally reinforced the transmission system to a point where we don't need it so and that's happened in all parts of the country so you know expect over time to be less dependent on local generation to meet our peak demand but still able to use local generation to export if we're producing more than we need over over the more than we consume over the year i think that's right yeah thank you come back on on one thing on the the 1 in 600 event that the you know and that and clearly that that is that is related to a um as it said in in national grid's letter that the peter head along ganan run available there's a low probability 1 in 600 event brought about by extreme weather affecting the electricity network that and that very much relates to a loss of a loss of load and some of the some of the really extreme black star situations that you'd find in the contract itself and i'm sure Mike can add to this it is about voltage control which happens every minute of every day on the network and i think that's that's an important sort of point of clarity um you know to give you a a small example from last summer which i think is a good example is um the you know the power price dropped through the summer and therefore longanate was in a in a loss making position last summer for a couple of months so we basically started to turn the station off for a couple of months like we you know like obviously we plan to do because each marginal unit wouldn't make any money um but to provide voltage support services to national grid we were actually traded back on every day last summer there was no point last summer where longanate went down to zero there was always one or two units on to provide that support because that's the the service that longanate was delivering into the network and it's just you know that that's how the network's been running in scotland for many years as i say and it you know a good example was last summer because in an economic sense we would have turned the station off for two months and brought it back on for the autumn and winter i appreciate you need to back for your team to a certain extent but you wouldn't suggest that that's the only way that service can be delivered um no just the way it's been delivered over the last few years thank you okay um i'm conscious we're we're about 25 minutes or so less i've got five members to come in uh who i'll try and get through it'll be helpful we didn't go over old ground though because i think we've we've exhausted quite a few of these issues as far as we can um so it'll be helpful that we can have kind of novel novel angles um Richard Lyle start with you well i'll start i'll i'll not go over so i mean i'll give you another angle um security of supply and and the year is now 2025 so 10 years from now we've lost longanate 16.7% peterhead not on 8.7% hunterston closing in 2023 7.1% torness 8.8% so that's 41.3% away from the the whole electricity supply we at this moment in time for 30 years scottish power said we export to england or whatever uh supply so you're saying in the document 28% exporting in this year so take 28% off a 41.3% were minus 13.3% of the electricity supply so in 10 years time 2025 how can you assure me and i know we can talk about renewables uh and what what's driving on but how can you support secure me uh and uh ensure that the ordinary mr misses punter out in the street can put the lights on in 2025 if all these stations are away in scotland mike calviw i think that's for anyone or i think there's no doubt as yeah there's a lot of change potentially planned um you know we do look further out you never to be when you look further out you have longer time to do anything about it and you'll have longer uncertainty so we we tend to analyse these scenarios but don't necessarily you know think about what we might do but not necessarily pull the trigger until we get closer to them a bit more certainty and i certainly know that edf i think would be hoping to life extend their nuclear plants so they might still be open 2025 you know you don't know you might yeah you find out near the time um i think effectively as was talked about in the previous question as the system evolves then it's you know one you know there will be further investment in generation mainly renewables but it might be different sorts of renewables with different characteristics that provide more diversity so if more marine comes on that will probably be operating in different times in the wind so that would provide a benefit clearly if ccs happens that will provide a long term baseload option and as all that generation plant shuts the way the transmission charging regime works is a naturally rebalance so as soon as effectively there is not enough baseload generation in scotland to meet scotish demand then effectively the signals would radically reduce and even flip around so you know the it's meant to be cost reflective and if you get to the point where scotland is much more reliant on imports from scotland most of the time then you would actually see the generation chart in scotland come down massively um and and the demand chart go up and that's that's the way that the network works so there would then be a market signal and as if new say ccts have been developed across gb then it's certainly possible that um one or more might develop in scotland so there's quite a few ifs and buts in there and you know in in those timescales inevitably there's a lot of uncertainty and there's a lot of you know all sorts of things that might might might play out in those timescales i think the key point is probably the one we said earlier is that ultimately if there is any concern in scenarios about not enough local scotish generation in those timescales we do have time to bring forward further transmission investments in order to secure the network and and effectively we plan the system under a very robust systematic process to spot these issues coming and to make sure there is a network that we can secure to the security standards. Jim Smith. I just wanted to clarify something. I mean around Peterhead there's obviously been a lot of discussion about long-end Peterhead closing I mean the first thing to say is that we've not said that Peterhead is going to close I have said and we have said that it's economically challenging at the moment but you know we are through a number of things working to try and get through this particularly challenging period as I say we're investing to make the plant more flexible for this winter coming through potentially winning ancillary service contracts like the voltage contract I mentioned previously and the one that's currently in play we hope to mitigate some of the the losses that we're seeing in the plant and that's obviously a very short term thing. Peterhead is a modern gas fire power station it's got the capability to operate well beyond 2030 so your scenario of 2025 Peterhead closes not necessarily when that will happen and through CCS if CCS goes ahead and of course there is the fact that you know at some point we would hope to see a market recovery in the wholesale market for thermal plant then you know Peterhead could still have a long-term future in the Scottish generation market. In addition to those points by 2025 we will have billions of pounds more invested in the transmission system there are a number of upgrades not just the western link but also the Kate and Smory project and others which will lead us to have a much stronger transmission system to support security supply by the time we get out there we would expect demand response to play a much bigger role in helping to meet security supply so that's another change over that period and we would then be into about the sixth or seventh year of the capacity mechanism which is intended to help as well with long-term signals for investment in generation so there's a number of factors by the time we get to 2025 there's no perfect guarantees but there's a number of tools in place to help ensure we have security supply over that period. Just start with a question for the national grid the national grid's undertaken a system study of Scotland and last month the first minister wrote to the prime minister asking for that to be put into the public domain along with all the background reports that accompanied it it's still not in the public domain can you tell us where it will be? Yeah that request i'm not sure it's actually come straight to us but we you know we did this system study jointly with Scottish Power Transmission and Sheet Transmission we've shared it extensively with Scottish Government and including some advisory boards and we've also shared it as you might expect with Ofgem and with the UK Government we are very happy to put it in the public domain and you know we will get it published in our website you know it probably will probably do it once we've finished the current procurement exercise so we can put effectively a whole package of stuff in in one go but effectively we we're very happy to publish it. Can you publish it now? Well i think it's just effectively we just need to get it up on our website and just make sure that the only issues we have to worry about are any sort of commercial sensitivities around individual generating stations so you know we i mean effectively i would anticipate it being published in a matter of weeks. Right i don't quite understand why it's so difficult to get something on a website would you share it with this committee now? I'm very happy to send it to this committee. Now after you leave here today yeah okay thank you very much you've mentioned in a couple of occasions the increase in wind power particularly from Scotland but also the intermittency of supply the institute of mechanical engineers conducted a published a report last year that showed that the UK's energy storage capacity was way behind other countries so we're not even the top 10 for energy storage. Have you any right across the panel any thoughts of why that should be is electricity market reform not encouraging the development of energy storage capacity in the UK? I mean i guess globally if we if you're talking about electricity storage rather than energy storage clearly for energy storage we have lots of gas storage and so on but in terms of electricity most of the storage that exists across Europe now is in hydroelectric systems with pump storage we tend to have less hydro systems than countries like Norway and Switzerland and Austria and so on because of our geography and we have clearly have some in Scotland have some in Wales but it's the costs of having pump storage sites in GB are higher than in some other countries therefore we tend to have less and rely more on gas plant and another plant for faster response we are very keen to see new forms of storage come on to the system over the next few years whether that's battery storage we've funded innovation trials on the networks looking at some of these issues so we're very keen to see those things develop as are many other countries across Europe they're not widespread anywhere at the moment the current stats on on electricity storage will be primarily about pump storage you say it's not widespread anywhere but we're not in the top 10 in the world our european competitors are ahead of us and the institute mechanical engineers says that we need to increase our capacity considerably are you aware of the institute mechanical engineers report i'm not aware of that specific report i'm aware of the report i mean i think um the issue with the port it seems to presuppose that you can say what the right amount of storage is i mean my view is that storage has a number of potential uses and if it can become more economic with a sort of innovative new technology like batteries like flywheels or whatever then it can play a massive role both in terms of helping with intermittent generation in terms of smart grid applications you know we are very interested in how we might be able to use storage to provide some of these sort of balancing services voltage controls things that we've been talking about so we are very enthusiastic about the technology but the reality is at the moment is that it's not economic and you know now that might change in the next few years but so i think to say there's not enough i think is you know is is presupposing you know what the right answer is which um i'm not sure how you know to me that's why i have a market and if the market says it's economically will be developed you can you click see maybe like Jim Smith in the ring to come in and i was going to say yeah i mean you know pump storage is obviously the tried proven method of electricity storage never mind any new technologies so i do sometimes wonder why people get all worked up about battery storage when we've got a proven technology that works i mean we do have a consent to to build i'm sure that everyone's away at a pump storage in the north of scotland which is actually a little bit different to both foyers and crook and and indeed the norwegian fistaniog in that it's built with a very large storage capacity unlike these which have really built to store maybe seven or eight hours of their capacity for to deal with the peaks but unfortunately the marketing mechanisms don't exist to justify the investment okay last question yeah just to pick up on that point and Mr Calhoun's point i mean nuclear power isn't economic either but it's getting huge subsidies from the UK government so you know like so why is it okay for nuclear power not to be economic into get investment but not energy storage that's a question for the UK government as to what they choose to support isn't it all energy technologies could you anyway thank you i'm Lewis MacDonald i wanted to pursue the issue of the medium term and i think from what jim smith said in answer to a previous question peterhead is working on a number of different options in terms of the medium term my deduction from that is that the short term bid that you are engaged in this month is not vital to the future success of peterhead although it's partly your bigger plan would that be a fair part of one of the things you're doing in order to maintain that as i say the economics of peterhead are currently challenging and you know what you would say well why keep going well we've always hoped and felt that we could secure some ancillary services from national grid to help contribute to the upkeep of the station in this sort of short term period and you know as i think mike said he's got an obligation to find the most economically beneficial solution to his problem so we've put a bid in and we're obviously keen to to be successful so there's a number and carbon capture you mentioned as well as a key part of that project i wonder if i could ask neil clitherow from scottish part we've heard from you of the one contract that you're bidding forwards clearly is important from your point of view are there any other irons in the fire that the committee should know about in terms of the work you're doing to maintain this station to 2020 no no really no no we you know ultimately with power plant and with you know as jim said with gas plant you generally sort of suffer through the through the difficult times with the expectation the market is going to change so in the early 90s both cackenzie and longanna didn't didn't make any money for a number of years and then we kept the plants going um such that over three four years such that in the end the market changes and and you have an opportunity though the difference today is that is that there's an acceptance that coal is in a very difficult situation in the uk network and therefore the likelihood of of some um something going to happen in the future which makes coal significantly more profitable where you can ride out the difficult time with an expectation in two or three years hence making money to recover that is is extremely unlikely so therefore you get to the point where you have to take action today and that's then that's what that's what we've tried to do and obviously we're doing all the things you'd expect of us making the plant more flexible to try and deliver services to to national grid you know managing the cost base managing all of our contracts everything we can to try and try and you know bring the cost down and make the plant in a in a better situation but the work that's being done elsewhere and carbon capture from coal is not worth that of any interest from the point of view of the island no no all right thank you um carry hilton um thank you unfortunately most of my questions have been stolen um right um i've just a question for the national grid i guess you said earlier that um decisions um we're down to um power station operators but in the briefing that you issued last week on security of supply you said that you were committed to applying your expertise to developing sustainable energy solutions for the UK and i want to know more about what does this mean for long anna does it involve exploring an alternative future option for the site and for the workforce um i don't think it's appropriate or our role to effectively um look at individual power stations and and and you know what the best options for that site is and for their workforce i mean clearly that that for long annet Scottish power have to take decisions and uh uh yeah i'm i'm yeah neil has talked about his plans um ultimately you know we look at the overall GB network we have a clear obligation to make sure that network can be secured in real time and that the flows can go where they need to go and as you said you know we are committed to you know doing our bit to help move to a more sustainable decarbonised system so there's a lot of investment going on in transmission network across the whole of GB in order to allow you know new low carbon generation to to connect and uh you know so we do see ourselves having a big role in terms of that sustainable future um but as you said sort of individual uh decisions on individual power stations are down to those power station operators is a follow-up um probably for the whole panel really um you talk about investment in the transmission network and i wonder what the panel feel is a likelihood of a new gas fire replacement for long annet and what conditions would have to be met for this to happen it it would be very very unlikely at the moment given the the difference in the economics between locating a gas plant in Scotland versus locating one in the south east of england it would you know effectively you're going into one capacity auction which is a UK auction with no there's no obvious there's no locational things within that auction so you're bidding against all these other plants across the UK um and and effectively you've got a an economic situation where the charge is higher in Scotland versus elsewhere therefore if you get in a fixed price somewhere you know fixed price for your capacity you're gonna you're gonna try and put the plant in the in the place that has the the lowest fixed cost because that's the most economic and when there's only maybe water you can't predict what's going to happen in future auctions but in the last auction there's just one plant that was new in the UK uh you know i'm sure in the next auction there'll be one maybe two plants in each in each auction then those plants will obviously be located where the transmission charge is the lowest because everything else is the same in terms of that those plants to take that example i think that the plant that was successful in the capacity auction wasn't located where transmission charges are lowest it was located in the north of england rather than the south but i i do agree you know with the the driving factors that the near was talking about clearly is less likely that the new gas plant at the moment would be located in in scotland than in england there are a range of factors including ability to get planning consent land prices gas prices which also vary um locationally and the electricity charges um i suspect it would need over time there to be a different balance of demand and supply in scotland and in the rest of the country which could lead to to transmission charges then changing so i wouldn't suddenly rule it out over the future i think but i agree at the moment it looks less likely that's why we've got options you know we have an option at um our old kikendi site for a gas plant but also an option at our uh damhead creek site in the south east and that's the one that we entered into into last year's auction i can't remember if yourself martin or you might be suggesting that if the if there were a drop-off of generator capacity in scotland that the transmission charging regime would then flip around and make it make it uh more more viable was that was that the case yes yes you said that yeah okay sorry yeah kara you just got one um final point um please it's just mainly for scotish power and touched on this before but obviously this is a really worrying time for workers and their families and probably more worrying after today's session i think to be fair um if so if the decision goes the long way the wrong way for long annit and the contract's not awarded what would be the timescale to cease generation on the site um if in in in you know in terms of the the what i said earlier then the march 2016 was the the position we will be we will be looking at for for the site now that that assumes that the transmission goes to zero an effect with the the station at that point would would close um obviously in terms of um the the potential deal with national grid um then that would mean that the the transmission would drop um not down to zero it would it would be above that and therefore you know the the the the workforce and everything would would accommodate that that lower that lower level of transmission um you know scotish power have obviously um two or three years ago shut shut the kakenzi plant um and um a lot of the staff at that plant um you know some of them moved to our long annit plant in terms of the workforce there some of them got jobs else were in scotish power you know in terms of the metering businesses the network businesses and obviously some of the employees took took early retirement and and we managed to like we always do we'll manage the employee basis as best we can to to either provide a future at scotish power or or to to provide the the early retirement voluntary severance um plans that we always we always provide and always have provided for the last um well since we've since we existed thank you very much you spoke about the postage stamp model um if i can ask scotish power what would be the price of the postage stamp for you if transmission costs were defined in that way um Jesus that's a good question um i'm not uh i'm not i'm not entirely i'm not entirely sure on that it depends it depends on the sort of model that will be developed in terms of whether um it was a postage stamp with the same split at the moment between generation and demand whether it would just be applied to demand um you know what that proportion would be um i suppose the the key thing i look at at the moment is the difference between um what um what we pay today and what other other coal plants pay pay across the uk is the key sort of difference that i that i look at um and that's you know that that's that's where the the sort of the issue comes in in terms of this plant um i suppose the the key would be what the construction of that is but that's you know it it takes a long time to change transmission charges you know the current project transmit commenced in 2008 2010 so i think initial proposals eight 2010 and they're coming now into into effect next year so it's not it's not an overnight thing there's a lot of a lot of debate because it's got a lot of consequences a lot of transition consequences to occur on that postage stamp model of delivering serves an entirely legitimate one in terms of consumers it's not something extreme so you know from your point of view it would benefit you i don't know what the balance of winners and losers would be in terms of people who would but that would be something worth while reflecting on because i do think from um Ofgem's argument seems to be this model's in the interests of consumers a postage stamp model wouldn't be i think that's pretty high i would argue that's highly contentious um given that it's an entirely legitimate way to to deliver things i suppose um you know we're not talking about having a lot of time here what would the transmission costs need to be for you to be able to function beyond 2016 we would be if we were in the same if we're in the same you know the model that we looked at was if we were paying like a 10 million transmission cost which i think is the equivalent to to the sort of midlands area if we're paying around that 10 million instead of paying the 40 uh the 40 million then you can the plant will not you know the plant would just survive in terms of the the break even and that would you know enable us to fight another day when it was suggested that national grid might have a role in terms of you know beyond i think you made the point is there was a matter for plant operators but would national grid not accept that you're defining to some extent the ability of plant operators to operate if you stick to a transmission cost regime that means it disproportionately does benefits along on it in comparison with other plants well we understand that our transmission chargers will have an impact and effectively they're designed to provide the cost reflective signal that martin's talked about um as nil says you know changing you know we're we're we're currently um planning to implement a major change next year subject to judicial review so making further changes in the short term seems pretty hard to achieve um you know and you know you know there were different way you know even if longonic closed some of its capacity that would reduce the transmission charges to all the other generation scotland so it's quite a dynamic system decision to stick to transmission costs has a consequence for long anit which is out with their control it has a consequence for all generators on the system and specifically for long anit it may mean that long anit might close so you do have it and if i would ask of gem the same question that sticking to a model which says isn't the interest of consumers will have a consequence for long anit so have you looked again at your view in this in terms of benefit to consumers course of um as has been said several years our estimate is that in the longer term it would cost several billions pounds more for consumers um to move to a system of everyone paying the same as i said many other countries have market designs with locational signals um in the charges it's part of the european target model that has been agreed at european level um you know yes it has impacts on on individual plants it's not entirely outside their control as has been said um if they reduce capacity then they they pay less um and we see for the year in question really which is 2016-17 um we see long anit's charging charges falling by more than 10 million pounds um you know clearly it's that's not to a level that is a level that they want that they would choose but within the legal framework we operate making individual decisions just to give a bit more money to one company rather than another is it's not something that's open to us well it is a choice of model and there are other choices in model that are entirely legitimate which would have different impacts and different plants you've chosen a model which has specific impact i think long anit's was the last question i would ask in terms of the broader consequences of i mean you talked about kikkenzi workers having moved to long anit presumably a significant number of your workforce are skilled and therefore long anit you might argue is a place which generates a demand for skilled jobs which has an impact on um local drivers around skills opportunities for people to or incentives for people to take up particular kinds of jobs is any work being done by anyone on the panel around the impact of closing long anit on the development of high levels engineering skills or whatever within those communities and more broadly for Scotland well i think um you know the the first thing to to say is just uh you know in terms of the job situation overall as i said there's 270 permanent employees there's another 160 as permanent supplier employees on site and at each major outage we we bring in between five and seven hundred other employees from from our suppliers and there's a hundred small business suppliers receive regular business from long anit totaling 10 million per annum so it's a hub for the local the local economy in terms you know as well as other major industrial plants that we know of in that local economy it's it's a it's a hub that's there in terms of scottish power we um we have strong apprentice programmes that we run across our energy networks business which which runs across scotland so we're always looking at reskilling people retraining people to to assist in that transition obviously we've also got good connections with other employers across scotland um that you know when these types of things happen there's there's always some parts of the economy uh there's some parts some sort of these jobs are growing and therefore you can move people across to them and we'll we'll throw every every tool we can at managing managing uh what what could be a difficult situation it's obvious examples across scottish industry where people have retained jobs in order to retain the skills for when the market picks up again and it doesn't feel to me as if that's something that's even across the desk of those who are making decisions which have a consequence for long anit it's maybe it's a matter for scottish government to look at in terms of our international economic strategy whether the things they should be doing in order to maintain skills while the market is is not being helpful i think i think i have more of a rhetorical question than one to the panel but if anybody's keen to answer it well for scottish power we we've got some extremely skilled dedicated people at longanna and our aim is to it is always to try and find opportunities for for those people should should the status of the plant change i appreciate there are other members keen to come in but we are already over time we have another panel to hear from so can i thank you all for coming along this morning it's been a long session and we covered a lot of ground but it's been extremely useful thank you to you all and we'll have a short suspension can reconvene thank you i'd like to welcome our second panel we're joined by councillor tom adams from five council and robin preswood of who's head of service economy planning and employability services thank you to you both for coming along i think you were you were here to hear the evidence we got earlier about a long anot i mean just to summarise it we've always known long anots likely to close by 2020 there is now a prospect of that closure being brought forward if i recall correctly what scottish power said if they don't win this contract with national grid the closure could be brought forward to march 2016 and clearly there are very serious implications for the five economy if that were to take place i wonder if you could just maybe start by just explaining a little bit about what five council has been doing in relation to this issue and what initial thoughts you might have about the impact on the west five economy should long anot close early as was being suggested thanks very much community i'll start off and councillor adams will come in around the economic impact and particularly around the supply chains i think that's an important point i think that the first point to emphasise is we were asked here to talk about the economic impact of closure and we will do that but i think that the first point of both of us want to get across is that we're here primarily as part of the campaign to support long anot in a longer term transition to a cleaner form of power generation and the views put forward by mr clitherow from scottish power i think are very similar to the views of the council we've always had very good relationships with scottish power they've been a good employer they've gone out of their way to do community engagement well and they've been a high quality employer and they've always been an excellent partner with the council and the council passed a motion recently of support for the campaign against premature closure of long anot and there is unified cross-party position on the council around that in terms of economic impact we're obviously focused correctly this morning on the 260 direct employees at long anots but towards the end of mr clitherow's contribution he talked about the supply chain i think he gave a figure of potentially five to seven hundred people in the supply chain and contractors and that chimes with our analysis which we've done just using standard industry multipliers which are available through scottish government and we'd estimate the potential they were around 600 indirect jobs which depend on the facility and an additional 200 induced jobs which would be jobs in local shops and hospitality facilities which are supported by the wages coming out of the plant so from our perspective we believe it's not about 260 direct employees it's about a thousand jobs across the central belt not just in west fife villages and in long anot it's king garden itself but across the central belt so very very significant impact and i think that's the context that we must see it in in terms of any response to any potential closure situation particularly you know council items wants to come in and talk about the impact on the coal industry and i'm sure members won't need any history lesson from me on the recent phenomenal pressures on the coal industry and the ups and downs of that scottish government coal task force which is a very important part of the response and clearly long anot does consume a very large amount of coal from the remaining scottish opencast mines including two mjordin and instantinians i think are still both supplying the plant at the present time so there'll be a very significant impact on that so there'll be an economic impact but there'll be an impact in terms of the restoration and the environmental impact of those operations and the ability of the operators to ensure an orderly restoration strategy so five councils position is very clear we support the position as articulated by scottish power and the need for an orderly rundown and transition of the site if the economic circumstances are correct we broadly would be supportive of a transition to a cleaner form of thermal generation on the site we think there's an incredibly important infrastructure at long anot which shouldn't go to waste it's strategically well located for scotland i think we don't anticipate that a replacement facility wouldn't require to be anything like as large as long anot but certainly looking beyond the 2020 horizon that mr clodro set out we do believe that if the economic circumstances and the charging regime change then a gas fired CCGT would be probably a beneficial option for us to explore i suppose there is a degree of frustration within the community and within the council i'm sure council items would like to articulate that a little bit more we believe that we should have had five to ten years to plan for this transition and realistically it's only been since october last year that we've had any real visibility of the potential closure of the facility in 2016 that the types of things that we would have liked to have done is to lessen king carden and the west five villages dependence on that large single employer and we would like to do more work around enterprise and entrepreneurship to stimulate a startup culture there and get many more smaller firms we would like to ensure that there's a supply of physical business infrastructure employment land and facilities for startup businesses perhaps a business incubator small industrial units to again provide alternatives to the sort of the large single employer that we have and we would certainly like to pick up an accelerated strategy around those with support from the other partners and again council items would like to say a little bit more about that i think finally in the event that the station does close there's a well trodden path through the pace multi agency response group which Scottish government and the council DWP and skills development Scotland would jointly lead on so there would be a strong response to support the existing workforce in considering other options through that and we would want probably some kind of task force approach similar to the halls of broxburn task force or other similar major closures might require a multi council response because clearly the economic impact will not stop at the boundaries of fife it will go across the central belt into folker, into clack manager, into sterling, into Perth and Kinross and further south so we would need to engage with partner councils as well as part of that approach but i'll hand over those words to councillors. If I could maybe just concentrate a wee bit on the supply chain here where if you look at where coal's coming in from just now there's we're speaking about five million tonnes getting burnt at Longannock you have that supply chain where coal's coming in for around the world's coming into Hunterston, then getting shipped for Hunterston into Longannock whether that be by road haulage or even trains the impact then that has if if we have a which is a clear and present danger here or a premature closure along the impact that will have on the economy in fife is absolutely horrendous speaking as I actually worked in Longannock in the coal industry in Longannock which closed 12 years ago and the local economy is just now starting to pick up for that closure it was quite a severe closure and there wasn't really anything in position for when that industry closed if you look at it now you have the haul years they're in danger you have even the Alloa to King Cardin rail link which there is significant amount of transport on that rail link I'm not sure it would close but there's quite a major economic impact that would have on it the the two local coal mines that are feeding into the opencast sites both in between them employ around about 500 employees again it's a huge impact what what we're actually asking for here today is if that premature closure happens we'd be looking for a task group to be set up which would probably include Scottish Power, Scottish Enterprise, Scottish Government and Fife Council with significant funding put into that so that we could then enable people to go into apprenticeships and then secure long-term employment for those that aren't directly involved as well in the Longannock power station what what we're looking for is the whole Central Belt with Scotland but most of all in the West Fife villages and the local community at King Cardin and also just across the water there in Alloa and places like that but it's quite a huge problem that's going to arise and we would look for a lot of help from organisations like that. Okay thank you very much to you both before I bring others in just to tease out a couple of issues I think you said your Mr Presford and your economist Mr Councillor Adams your preference would be to see a replacement for a Longannock and you mentioned a gas fired generating station have you had any discussions with Scottish Power around that as a prospect? I speak fairly regularly we engage with all the major employers in Fife and given Scottish Power's importance I manage the relationship personally so we're aware that that from their point of view is technically feasible but not commercially viable at this time so that probably if the overall economic circumstances surrounding thermal power generation Scotland were to change Scottish Power would certainly be keen to explore that again I think that's consistent with the answer that Mike Clithero gave earlier on we believe it would be smaller than the capacity at Longannock. We don't see any regulatory hurdles it would almost certainly be a Scottish Government concern rather than Fife councils so I can say that without prejudicing my position as head of planning but we believe that it's broadly consistent with both Scottish Government and Fife council planning policies so I don't see any major headaches with that from a consenting point of view. Okay and if there were no replacement power generating capacity is there anything on that site that could replace these jobs or come even close? It's certainly a very large site so it physically has the capacity to be converted probably not the main power station itself but some of the ancillary buildings could potentially be converted and where we've seen large-scale closures in the past one of the options is to bring some capital to the table convert for example workshops or offices into business incubation space maybe that's not feasible and a complete removal of all the estate is required and therefore building somewhere else on the estate a new build proposition perhaps a small business park with a business incubator some terraced workshops just to provide options for accommodations for small and growing businesses in the local area. Okay but that's not going to come anywhere near the what were you talking about 500 to 700 jobs dependent on the station at the moment? Yeah I think the thousand jobs figure if you take that as something which is broadly consistent between the point that the scotch power set out and the view that Councillor Adams and I have expressed that would be distributed across Scotland typically if you build a business park over a period perhaps of 10 years you create 60 to 70 jobs per hectare so a 10 hectare business park by the time it's completely developed might have 6 to 700 employees on it and I think given the strategic location of Longanna at King Garden next to the new bridge well connected for many communities we certainly see over a period of time if we could put some capital investment into business incubation and a business park we could gradually grow the workforce back up but it wouldn't be as you say an overnight transformation because it would take time for businesses to grow and for businesses to move into the area. Okay thank you. Good morning. Good morning Robin. I'm from Days and Dundee and in 5. When did you first know of the real danger? I mean I know you say you talked them regularly and it's in your own portfolio but when did you first know that this was a likelihood the closure was a likelihood? I hope I'm not going to say anything to incriminate myself. I spoke to the generation director Hugh Finlay in October on November of last year and he explained the position that they hadn't gone into the capacity auction because they couldn't make money doing so but he explained that they were bidding for the supplementary balancing reserve and I think at that time Scottish powers of view was that national grid needed long enough. I think what you've heard this morning proves that national grid thinking or other public statements have changed quite considerably during that period so my assessment of the conversation in October and November of last year was that this was probably saberattling and that an agreement I felt might be reached between the two parties. The news flow hoted up considerably in January and early February and I spoke to you again at that time and it was really only in that second phone conversation when I realised that there was a very real threat that Longanna may close as early as 2016. If you think about the story of Longanna and all the engagement that the Scottish Government and UK Governments had around it it's not that far ago we were considering spending in excess of £1 billion in doing carbon capture and storage at the site linked to the golden eye field in the north-east of Scotland so that was comparatively recently as Mike Litheros said they've spent £250 million in recent years in pollution control measures so that I suppose part of our frustration is that it does feel a little bit like dancing with a corpse the way public policy is lurched from one side to the other around the future of Longanna and that I think has been a compounding factor in the frustrations that the local community and the local council feel. If I may say so I get kind of I have to say I was kind of depressed by your comment that you know what if this if this shuts and here's what you're going to do and you know with all due respect we're going around the same loop that we go around very often when places major places close you know we'll bring in pace and we'll create you know small businesses and da da da da. I mean what what have you done so far since october to try and mitigate this this decision and you know get the community behind you to effectively to fight this this decision based on and based on some of the information we had previously you know there are enough holes in the argument that could have been prodded and certainly will be prodded so I mean why are we going down the road it's going to close. The council's taken very clear and robust action to try and campaign against the closure there's been a motion agreed at full council of unanimous support for the continuation of power in a longer term strategy to to clean up power generation at the site. The council leader has written to both half gem and national grid highlighting concerns and seeking assurances that everything is being done to ensure a medium term future for long annum. The in terms of community based campaign five has strong record in this area and I think the the campaign against the closure of Tesco in Cacoddy is a current live example of how the community tends to unify and come together very quickly with the support of cross-party groupings of politicians to campaign on this issue and I think the fact that the long annum campaign is really only starting vigorously now I think is a reflection on the fact that the realisation has only come really into 2015 that there is a real and present threat to to the station. Ryszard Llywodraeth, to council to Adam's I can certainly sympathise with the council's position in coming from an area of central region I was a councillor on mud old district north larger council where we had to deal with the Ravens Clegg closure which thousands of jobs went and it's actually taken the council a number of years to get back up and I certainly recommend you chase the government for a national priority which was eventually given to Ravens Clegg and also for tax incremental funding but we don't want to get there what you know in the question we couldn't get into asked was how does the council feel about the transmission tariff charges you know when you look at lungannax paying 17 sit over 17 pounds and you go to central london and I loved the comment by Mike Calvo that you know central london is minus five pounds west heaven and cornwall is is even nearly six pounds minus six pounds in transmission charges you know here we have a lungannax an excellent facility my concern is about future supply as I quoted you were there 2025 what's going to happen you know where's the situation that if this closes you know and they're basically saying it's because of the costs and it's cost no more 40 million pounds to run it but if they've done away with these transmission charges and ensured that they were equal all over the country as it is in Europe you know is the council pursuing that I suppose the council is anxious to ensure that lungannax has a level playing field I think that the detail of the way in which the transmission charges play out and its impact on lungannax hasn't been subject to detailed investigation because it is something that it's probably out with our scope as the local authority we support a level playing field and we would be keen to ensure that lungannax can compete openly on that basis I think it is important to emphasise that the I think that the comment that Mr Clitherow gave was that if lungannax were in the midlands it would break even so transmission charging itself isn't the sole reason that that lungannax is facing financial difficulties there's clearly a carbon tax and there's the nature of the capacity auction as well so I think it's important to recognise that and to be insured that we don't just focus on one problematic aspect of the financial challenges facing lungannax with the greatest respect not having certain faith council you have a regeneration committee so economic committee that you will be pursuing the case through and I know you have all party support on this but you know it's a particular committee there's a particular task committee within the council to pursue this item. A coal task force which mirrors the the Scottish coal task force which has largely taken the lead on areas like this we have the full council debated the motion which was agreed unanimously across party support and then we have an economy and planning pack policy advisory group which may wish to take up and look into the detail but at the minute it's very much campaigning mode and there is cross-party support for the campaign. I wish you will thank you. I was a wee bit surprised to say that it was only recently that you'd seen a real danger in terms of the closure of the plant we mean we've been discussing the decarbonisation of energy supply for a long time now in Scotland and the UK there's been a general expectation that lungannax would close by 2020 and there's still no clarity that you know an open debate let's say about whether even a new generation of gas energy generation is compatible with with the country's climate change objectives so you've presumably been spending some considerable number of years looking at the long-term future and developing alternative plans for the contingency that there is no energy generation on that site? We were aware that the likely backstop date was 2023 we'd been planning on the basis of lungannax closing in 2023 and we have through the local development plan identified options for physical business park type accommodation to help with the diversification. The council is strongly supported of decarbonisation and furgus ewing at the launch of the RWE biomass plant in Mark Hinch last week. Described, Fife Council has been one of the leading councils in sustainability and low-carbon generation so it's territory we're very comfortable with. I should have emphasised that it was the premature closure which has taken the council by surprise rather than the closure itself. I don't think that there's anyone within the council who's arguing that coal should have a long-term future into 2030 or 2040. You checked at a very practical level, who owns the land and who would bear the responsibility for the cost of decommissioning plant or buildings? Would that fall to Scottish power or to the council? Would it need some additional support from the Scottish Government to deal with those practical issues? Given that, as far as I understand it, the land at Longannad itself and some of the nearby land is reclaimed to the use of ash, are there issues around contamination or other environmental factors which would limit the use of that land in future? My understanding is that Scottish power owns the whole of the estate and that they would therefore be liable and full for the clearing and restoration of the site. It may well be that that isn't the case but that's certainly the normal approach in these situations. Our only experiences at Methill were when Scottish power closed a station some years ago and demolished it four or five years ago. In that instance, the site was owned by fourth ports on a long-term lease but, as part of that lease, Scottish power was required to clear the site and restore it in full before returning it to the landlord. I think that, in this instance, they owned the site. In your understanding of the relationships, the responsibility would fall on them to clear and restore the land and it would then presumably transfer to the council? I suppose that I would anticipate that, if we had a joint task force involving the Scottish Government, perhaps UK Government, Scottish Enterprise, Fife Council and Scottish Power, we might work jointly with them on what the reuse strategy for that site is. Certainly, given the extent of the grid infrastructure there, I would hope that, in the first instance, we might consider what use we can make as part of Scotland's journey towards a low-carbon power generation future, so there might be some options arise from that. We would also want to look at whether any of the surplus estate could be turned to future economic use. Is there some land that might be suitable as a business park? We did, as part of the local planning policy work, identify a business park site and we had a provisional agreement with a housing developer to cross-subsidise the development of the business park from housing release, but due to economic constraints, that may not be possible now, so we have identified other site options and we would want to work through a task force approach to consider how we create a business park and potentially get some accommodation for small and growing businesses as well. You have not found any problems in terms of land contamination with that kind of proposition? If there were any contaminations, the operator would be expected to remediate it to an agreed standard. I think that there are some glimmers of hope in what has been said today. Let me quickly explain what I mean by that, because I do not think that we should give up on this being a generating site. Longannock does have a gas pipeline going into it and we heard from the representative of Scottish power that they were considering cackenzi for potential gas use in the future. Now, cackenzi in the area has already absorbed the economic impact. It must have been difficult for people, but it has already been absorbed. Therefore, would it not be a common sense argument to put to Scottish power that, instead of concentrating on cackenzi in the future for gas, despite the issues of climate change, I understand that, Longannock might be a better site for that opportunity. Particularly given that if Longannock closes, the transmission charges mechanism begins to change in Scotland and costs come down. Therefore, there is a real campaigning issue there for five council and others to persuade them that Longannock should be the site for a potential gas in the future. Hopefully by 2020, what do you think of that, Robin? We would welcome that if there were a commercially viable solution to new thermal generation. I understand very well the point that Mr Harvey has made about gas in itself not being entirely consistent with our national objectives to decarbonise electricity supply to it. It is significantly better than coal. As a council, we would broadly welcome that. Mr Clitherow's comments were very clear at the bottom end of a pessimism scale about the likelihood of that happening. As I heard, Scottish power's position today was that it is dependent on substantial changes in the economics of UK power generation to make it commercially viable to invest in any gas in Scotland. From our perspective, I agree with the broad view that you have set out that Longannock would be an excellent location for new gas capacity if it were commercially viable. If the transmission costs were to change, that would open up an opportunity. If the worst was to happen, I am hoping that we could avoid that. Fife, Longannock and the warships work is coming to an end in the future at Versaith, potential for a double whammy on that part of the West Fife economy. Robin, you introduced the idea of the UK Government also being involved in that, because it would require them to be involved given that some of the policy-making decisions are not blaming anyone, but, by its nature, would flow from decisions made from that organisation. Therefore, how important it is, do you think, in any task force that the UK Government should be involved? All hands on deck in a situation like this, if there is the potential for 1,000 job losses across Scotland and clearly each of the bodies has an element of responsibility to react to that, I think that it would be very welcome to secure UK Government participation in that, reflecting their statutory role around energy. John Lamont, yes. John Lamont, no, sorry, Kara Halton. Yes, thank you. Just to pick up a bit, I think that it is a shame that a lot of this has been the debate so far has focused on transmission charges when both national grid and Scottish power have been clear that the current talks are not anything to do with transmission charges, but that aside, we have heard about five councils, we have heard about the UK Government, but it has long been anticipated by the Scottish Government in the national planning policy and other guidelines that, long an, it would be closing by 2020. So, do you feel that more should have been done by the Scottish Government to secure new employment and investment into Concardin and the West Fife area? I have not been actively involved internally within the Scottish Government in terms of what assumptions they have made around Longanna. It would not be unreasonable for them to have made the same assumptions that the council had made that the time horizon broadly we were speaking about was 2020. Given that we are five years from what was the previous consensus, and I think that was probably a consensus shared by Scottish power, it does not perhaps surprise me that there were not detailed plans in place around a contingency for a likely closure in either 2020 or 2022 or 2023, which was probably the initial date that we had in our head. So, the position has clearly changed very rapidly. I am not trying to make excuses for Scottish Government or for any of the parties that have been around the table today, but the position has changed rapidly. I would tend to focus on what the look forward is and how we collectively work to resolve the issue rather than trying to anticipate who should have seen this coming, because we can clearly all take some of the blame for not having considered this as a contingency. For me and I think for the council the focus is on how do we ensure that the impact on five, on West five particularly and on Scotland as a whole, is minimised. I think that is why the proposition of a joint task force is the one to focus on. Just simply in terms of what people have talked about in the scenario that the Lungannate production, as it did in 2016, clearly a task force would be very helpful. What objectives would five councillor enter that task force with other than clearly maintaining employment and skills, but in terms of the economic model that that might look like given that we are talking only 13 months from now? I think that first and foremost we would want to focus not just on the existing workforce, we would want to focus on career opportunities for the next generation coming through the ones that might otherwise have gone on to the plan if it had a longer lifespan. I think that we would wish to build on the council's very considerable investment in the five youth jobs contract, which has been a great success. Youth unemployment in five is very close now to convergence with youth unemployment across Scotland after many generations are being significantly higher, and that is thanks to a very significant investment of around £7 million over the past three years in the five youth jobs contract. We would want to extend and focus specifically around the Lungannate area to ensure that the next generation of young people have the opportunity to get into skilled jobs in other industries, and clearly there are opportunities out there despite some of the challenges around oil and gas. That is the first thing. I think that the second thing we would want to focus on ensuring that the barriers to businesses setting up in West Fife were removed. We would want very quickly to move towards getting a good supply of employment land and perhaps a small business centre and incubator unit to ensure that businesses have the ability to make that first step from working in the garage to working in rented premises, and I am hopefully expanding beyond that. We would want to work with Scottish power on the commercial opportunities that might exist for construction and engineering firms as part of the run-down and decommissioning of the site, and clearly there will be opportunities there. Again, I would imagine that Scottish power would be keen to work with us on a meet-the-buyer supply chain type assessment. Another part of that is a deep dialogue with Hargreaves and the other coal operators, not just in Fife but in Ayrshire and all the other communities that still have open cast coal, because there is a very real and live issue around what happens to those sites. If Scottish power stops purchasing coal for Longanett, I do not think that any of them are solely dependent on Longanett, but there are a number of mines that supply a fair amount of coal to Longanett. It is very helpful. Also, I think that we would want to concentrate on the social impact of such a large closure would have as well, because not only would you lose the jobs, but then you are looking at, for example, people going to work, bus companies may be stopping, buses coming in to pick people up because there is no employment for them, so that stops, then you are not taking people into towns, so that stops. Maybe schooling levels sometimes drop in disadvantaged areas, we do not want that, so that whole social impact has to be looked at as well. John Lennon, you mentioned that there is not just an impact in Fife council area, and I wonder what conversation you already had with other local authorities and whether has Coslaw been doing any work around this in terms of the broader impact of this? You have just said that the social impact is so profound that it becomes theoretical at one level of its transmission cost, but the actual impact directly on communities is going to be massive. Is Coslaw a good vehicle for that, and have those conversations already started? There has not been detailed work with other councils. I think that they are aware of the situation, and we will be following up. The initial period has been predominantly focused on engagement with the Scottish power, national grid off-gem, to highlight the concerns of engagement with the Scottish Parliament. We will make contact very quickly. Coslaw could be useful for campaigning on national issues and national implications for coal. However, in terms of the direct, localised impact, I think that bilateral discussions with Falkirk and Clackmanus and the other neighbouring authorities to exchange views and campaigning positions would be the quickest way to respond. I suppose that it was more what resource is in Scottish Enterprise or Coslaw, whatever, to support the right initiatives around employability and supporting people from one from the actual immediate impact of jobs going to transitioning to something else. There must be expertise about that that could be harmised. In terms of Scottish Enterprise, that remit largely transferred to Skills Development Scotland when they came into being, but SE will have a view from the company development side of things. However, the bulk of the work would be done by Skills Development Scotland in partnership with the relevant local authority and in partnership with DWP. That tends to be the core of a paced response team and working potentially with local colleges for reskilling. That is the way in which it tends to operate. DWP will lead the paced response team, but the other agencies will play in and bring expertise to the table. That tends to be co-ordinated on a pan-local authority basis in a large-scale closure like this one. Okay, if there are no other questions, is there anything that you would like to add, anything that we have not covered? Do you like to go on record? Crencel Adams? Okay, in that case, I just thank you on behalf of the committee for attending and we are well aware of the seriousness of the situation for the economy and the people of Fife, so I am grateful to you for coming. We will now move into private session and have a short suspension.