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Scottish Independence Threatens to Raise Power Bills, Davey Says

Scottish independence threatens to raise the nation’s power bills as billions of pounds needed to switch to green energy are borne by its people instead of being spread across Britain, U.K. Energy Secretary Ed Davey said.

“Scottish independence would raise fundamental questions about energy policy and I believe some of the best features of our system would inevitably be under threat,” he said. “In the absence of a united single energy market or agreed socialization of costs under our renewables schemes, the costs of renewables deployment and transmission infrastructure upgrades would, I believe, be too great a burden for Scottish consumers alone.”

A debate over independence sought by the Scottish National Party is intensifying before a referendum in 2014. The British government said the union with Scotland, which produced about 40 percent of U.K. renewable energy last year, provides certainty for investors it wants to attract to replace aging power plants.

Gamesa Corp. Tecnologica SA, Samsung Heavy Industries Co. and Areva SA are among companies that announced offshore wind projects in Scotland attracted by U.K.-wide incentives, Davey said, adding that support also spurs oil and gas investment.

In reaction, the Scottish government said it is the U.K. that needs access to Scotland’s “vast” renewable resources.

The rest of the U.K. needs Scotland’s electricity to meet its own renewables targets and help keep the lights on south of the border, a spokeswoman from the Scottish government said today in an e-mailed response to questions from Bloomberg.

Power Markets

In a conference speech today released on the Department of Energy and Climate Change’s website, Davey cited U.K. plans to triple renewable energy subsidies to 7.6 billion pounds ($12 billion) by 2020 as part of changes to power markets. “Most countries would prefer the benefit of such investment to be felt within its own borders and Scotland would become just one of a number of countries that the U.K. could deal with,” he said.

Scotland should consider whether independence would mean setting up its own program or sharing those costs, Davey said.

The Scottish government said the nation’s green resources mean it would be in the interests of the rest of the U.K. to ensure support is available to secure Scotland’s renewables.

Questions remain on whether a single energy market across Scotland, England and Wales would continue, Davey said. Under the 1998 accord that established a devolved Scottish parliament, energy policy including power generation, oil and gas, nuclear and coal, is managed by the U.K. energy department.

Scotland is responsible for its renewables subsidy program.

Also at issue would be how European Union climate targets pursued by the U.K. should be reached, Davey said. European Commission President Jose Manuel Barroso said yesterday that any new country must reapply to join the EU after voting for self- determination. Scotland said it didn’t agree with that view.

To contact the reporter responsible for this story: Sally Bakewell in London at Sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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