UK warns it may not buy electricity from an independent Scotland

Reuters

By Karolin Schaps

LONDON (Reuters) - Britain may not buy electricity from an independent Scottish state if imports from alternative markets are cheaper, the UK government has warned, putting further pressure on Scotland five months before its independence vote.

A Scotland split from Britain would have to rely on electricity exports to the United Kingdom to sell excess renewable energy generation because its grid is connected only with England and, to a lesser extent, Northern Ireland.

"With a range of generation sources within its own borders and elsewhere, a continuing UK would not be obliged to purchase energy from an independent Scottish state," Britain's Department of Energy and Climate Change said in a report.

Britain also imports electricity from the Netherlands, France and Ireland and plans to build other links to Belgium, Norway and Denmark.

The government said Scottish infrastructure investments and support costs for renewable energy would add up to 189 pounds ($320) to annual Scottish energy bills.

These costs are currently spread across consumer bills in all of Britain.

In addition, taxpayers in an independent Scotland would face increased costs from paying a share of decommissioning expenses and liabilities paid to the coal industry, amounting to more than 24 billion pounds, the government said.

The growing cost of gas and electricity has been a grave concern to many Britons in recent months and has risen to the top of the political agenda ahead of a 2015 general election.

The government's warning that it may not import Scottish electricity is Britain's latest attempt to persuade Scots to vote against independence.

Scotland's electricity network is connected with England, where the bulk of its excess electricity supplies are delivered. A smaller cable to Northern Ireland is rarely used for export.

Scotland is a net exporter of electricity, meaning it produces more than it consumes. Net exports stood at 26 percent of generation in 2012.

Companies producing electricity in Scotland include Iberdrola's Scottish Power and British utility SSE.

Britain's CBI business lobby said it agreed with the energy ministry's conclusion that Scotland would be better off as part of the UK.

"An independent Scotland could mean higher costs for everyone and far less certainty on our future energy supply," said Katja Hall, CBI chief policy director.

Scottish nationalists argue that a split would give Scotland greater economic freedom, including keeping tax revenues from UK oil and gas exploration, which is mainly based in Scottish waters.

The National Institute for Economics and Social Research also warned on Wednesday that an independent Scotland would face an immediate debt of 23 billion pounds in borrowing costs to the UK Treasury.

Scotland votes on September 18 whether to end its 307-year union with England.

(Additional reporting by William James; Editing by Dale Hudson)

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