I’m not here, and maybe power stations aren’t either.

I’ve officially gone on my holiday. Two thoughts I know will occur to you on reading this. The first is that you thought Members of Parliament take endless holidays anyway, so what’s the difference in actually declaring to you that it’s official this time? I ought to say that when MPs are not in Parliament they are not actually on holiday and that they are in their constituencies, dealing with their casework and that my announcement means that I’m officially NOT in the office.

The second thought that will then occur to you is that if I tell you that I am NOT HERE, isn’t that an open invitation for all the local felons to hot foot it to where I am not and take their pick? I should also then state for the record, if you are a local felon and reading this, that NOT HERE could mean I am physically present at my residence but have declared I am NOT HERE for the purpose of casework etc. or that, by the time I get round to posting this, I will no longer officially be NOT HERE having returned from where I was (if it was indeed not at my residence). So it’s not worth it.

However, being NOT HERE does give you time to think about some of the impenetrable conundrums that you might otherwise set aside on a busy day. And one of these is the curious case of the business-rated, non-producing power station. I know you might think there are mightier or less arcane conundrums to press yourself with, but there you are.

This matter must be more significant that you might think, though, since it has been raised with me by not one but two quite surprising people connected with energy matters over the last few weeks. The issue is this: empty power stations are business rated according to a formula last updated in 2008 (when empty property relief was removed) and last revaluated in 2010. Plants are liable to pay the rates unless they cannot legally be operated and the only way to escape payment is by demolition.

In other words, power stations that happen not to be producing will continue to be charged at the level of this formula until the next review. Which was to have been in 2015, except of course that the Government decided not to review the basis of business rates and go through a possibly contentious period of  quiet smugness from the winners and loud wailing and campaigning by the losers just when an election was about to take place, and has put a review off until 2017. So non-producing power stations will face another round of having to pay business rates on no income, since the formula doesn’t take into account the idea that you can have a power station ready to produce except…well, you’re not producing.

Well that’s a bit tough for power stations, you might say, but that’s how business rates work. And you might pluck from the corner of your brain a half-formed anecdote about how in years gone by didn’t some businesses take the roofs of their non functioning buildings so they could demonstrate that they couldn’t be producing and hence need not pay business rates on such roofless premises?

And if you did, you might then be half way down the road on my holiday conundrum. Because, now, of course, there is a new worry in town. If, as I have previously posted (here) you (you being an energy utility company such as SSE or Centrica) have decided to mothball a perfectly good power gas-fired power station because you think the spark spread is too adverse to make a living. But conditions might improve or someone might come along with a large cheque under capacity market auctions, or as we can now see under shorter term, National Grid strategic reserve arrangements (also posted on here). What might you do when you realise that you’re still going to have to pay business rates on it, probably until 2017? I guess you might do a rational calculation on what it is you will be liable for. And then decide whether you want to stand in wait, paying the rates and metaphorically keep all the roadies ready and the lights on the amps switched on ready for the anticipated encore. Or whether you simply, at that point, pull the plug? That is, if you have declared that power is not being produced and, by the way, you’ve sold the equipment to Australia, you cannot then have business rates levied on you anymore. But of course, when the National Grid then comes running with its cheque to ensure that you can, in principle, provide power if required as a matter of last resort, well you can’t then, can you, because of the fact of the equipment being at that point on its way to Australia.

Quite a conundrum eh? What do you do? I think my surprising discussants of the problem want me to conclude that the Department of Communities and Local Government in the shape of that patron of logical solutions, Mr Pickles, should rewrite the formula for power stations so that they are not deemed to be producing power when they aren’t. Then such power stations could rest easy in their ‘shallow’ mothballing, ready to crank the motors back into life when the cheque appears on the table to support them in this endeavour. And they secondly want me to think, which I believe is not without some merit, that the dysfunctional nature of arrangements between different Government departments may well have the result that parts of a quite logical device to ensure that power stations stand ready to produce when required might be about to be overthrown. Because all those producers upon whom reliance is being placed might just instead be metaphorically pulling their roofs off in order to avoid the consequences of a decision on business rates, which has been reached probably, for no nobler motive than to avoid a Daily Mail headline three months before a bruising election contest.

It’s a tough one isn’t it? And there isn’t an easy resolution or an obvious hero in all of it. Far easier to return to the novel I’m reading which I’m confident will have both if I just keep going. Which is what I will do.

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One thought on “I’m not here, and maybe power stations aren’t either.

  1. Is their a particular reason why the UK is wedded to gas power stations as back up?
    The National grid only gives capacity payments to more than 40mw I believe?
    Why?
    Decentralised local micro storage 1-10kw would be far more sensible than mothballed subsidised gas power plants serviced by ‘mothballed’? Fracking pads would it not ?

    Has praseag or decc done any calculations on costs for consumer backup that is underway in Germany?
    Maybe this Would help make commercial solar 50-250kw make more financial sense as the fit rate is marginal.
    Enjoy your holiday here or not !

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