Keep UK energy links, Scots urged

A commission examining the regulation of energy markets if Scotland becomes independent says the current single markets in electricity and gas covering all of Great Britain should remain.

The Scottish government commission, made up of independent experts drawn from across the UK, was asked to look at the possible arrangements and how a partnership with the rest of Great Britain could be made to work if Scots vote for independence in a referendum on September 18.

It also looked at fuel poverty, energy efficiency and encouraging renewables investments.

"Maintaining confidence in the regulatory system is important to investors financing long-term assets and consumers facing rising bills for essential services," says commission chairman Robert Armour. "The system needs to be properly resourced, robust and enduring, and should deliver just and affordable outcomes."

Working models of cross-border partnerships delivering jointly regulated integrated markets were found by "looking at Europe", says Armour - in Ireland, Iberia and Scandinavia. Such markets are consistent with moves towards market integration across the EU.

"Combined regulation of single markets operates in other parts of the EU and could work here," Armour says.

"There are undoubtedly issues that will have to be settled between the two administrations. We are a common integrated system and have a common interest in energy security."

As Scotland remains an economically attractive place to develop renewables and there are real benefits in exploring the potential of the Scottish islands, the report concludes that the policy commitment to renewables will be a "key factor" in investors' decisions.

"Joint governance can provide the right climate for necessary investment and for retail competition," the report says.