Hydro sector encouraged after talks
Minister promises to seek solutions to small hydro business rates fiasco
PRESS RELEASE January 16, 2020
Small hydro operators say they are encouraged after talks this morning with the Scottish Government following publication of the Tretton Review report.
Representatives from the sector met with the Minister for Public Finance, Kate Forbes MSP, and urged her to act quickly to deal with punitive business rates being felt by Scotland’s 500 small hydro operators. She was warned that some schemes would be put at risk or sold off to institutional investors outside Scotland, if the fiasco isn’t resolved quickly.
Simon Hamlyn, CEO of the British Hydropower Association, which represents the hydro industry, said: “After the whitewash of the Tretton Review yesterday, which failed to come up with any long-term solutions, I am encouraged that the minister understands the seriousness of the situation facing small hydro operators. It was a positive meeting, and we fully expect the minister to search hard for a resolution to the financial nightmare being faced by small businesses.
“The BHA is encouraged by the minister’s positive approach. She has asked for alternative solutions beyond those contained in the disappointing Tretton Review and says she will be considering the issue carefully. There is so far no proper long-term proposal despite a two-year review, but the Scottish Government appears to want to find solutions. We will work with them to come up with answers.”
The report suggests temporary government reliefs, which don’t apply equally across the sector and are not guaranteed, should continue, rather than recommending an industry-preferred permanent solution to the unfair rateable value increase in 2017 which far outstripped that faced by other businesses.
Incensed by Tretton’s failure to come up with a solution, hydro operator Stephen Mackenzie, from Muir of Ord, last night wrote to the minister describing “the whole process as a waste of money, time and effort for those who participated in it.”
He added: “The hydro power operators are still left with a non-dom rateable system which leaves us hugely disadvantaged compared to other technologies, and even more disadvantaged as compared to other sectors of rural industry. To be blunt – it is totally unjust, and totally unjustifiable.”
Hydro schemes are being hit with Rateable Values (RVs) two to three times higher than small wind schemes and four times more than solar energy schemes.
Business rates are based on Rateable Values which are set by independent Scottish Assessors who have refused to reconsider the absurd increases they imposed on small hydro, despite a series of legal battles.
Hugh Raven, managing director at Ardtornish, Argyll, which runs five small hydro plants and is facing a non-domestic rates bill of £500,000, said: “Kate Forbes, who is our constituency MSP, knows the serious impact and economic uncertainty being faced by small businesses like ours. I hope a solution can be found, quickly, because expansion and investment is on hold because of the unfair, punitive, rateable values being imposed on us.”
Solutions put forward by the sector but not mentioned by Tretton include rateable values of 8-10% being prescribed for the small hydro sector, or the wording in current legislation being changed to ensure key components of plant and machinery in hydro construction – the turbine, generator and penstock – are not rateable .
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