Smith Commission proposes part-devolution of energy powers to Scotland


Lord Smith and the Scottish Commission report
Lord Smith and the Scottish Commission report

The Smith Commission has recommended that some powers relating to energy markets, regulation, licensing and development should be devolved from Westminster to Holyrood in the aftermath of Scotland’s Independence referendum.

Industry views reflect the outcome of the Independence referendum – welcomed by some, seen as too devolutionary by others, or not going far enough.

The report sets out the agreement reached between all five of Scotland’s main political parties – Conservative, Green, Labour, LibDem and the SNP. These are:


Energy Market Regulation and Renewables / Crown Estate

There will be a formal consultative role for the Scottish Government and the Scottish Parliament in designing renewables incentives and the strategic priorities set out in the Energy Strategy and Policy Statement to which OFGEM must have due regard.

OFGEM will also lay its annual report and accounts before the Scottish Parliament and submit reports to, and appear before, committees of the Scottish Parliament.

Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to Holyrood. This will include the Crown Estate’s seabed, urban assets, rural estates, mineral and fishing rights, and the Scottish foreshore for which it is responsible.

Following this transfer, responsibility for the management of those assets will be further devolved to local authority areas such as Orkney, Shetland, and the Western Isles or other areas who seek such responsibilities. It is recommended that the definition of economic assets in coastal waters recognises the foreshore and economic activity such as aquaculture.

The Scottish and UK Governments will draw up and agree a Memorandum of Understanding to ensure that such devolution is not detrimental to UK-wide critical national infrastructure in relation to matters such as defence, security, oil & gas and energy, thereby safeguarding the defence and security importance of the Crown Estate’s foreshore and seabed assets to the UK as a whole.


 Energy Efficiency and Fuel Poverty

Powers to determine how supplier obligations in relation to energy efficiency and fuel poverty, such as the Energy Company Obligation and Warm Home Discount, are designed and implemented in Scotland will be devolved.

Responsibility for setting the way the money is raised (the scale, costs and apportionment of the obligations as well as the obligated parties) will remain reserved. This provision will be implemented in a way that is not to the detriment of the rest of the UK or to the UK’s international obligations and commitments on energy efficiency and climate change


Onshore Oil and Gas Extraction

The licensing of onshore oil and gas extraction underlying Scotland will be devolved to Holyrood.

The licensing of offshore oil and gas extraction will remain reserved.

Responsibility for mineral access rights for underground onshore extraction of oil and gas in Scotland will be devolved to Holyrood.


Next steps

These recommendations have been sent to Prime Minister David Cameron for the UK government to publish a Draft Bill, which may be enacted in Westminster after the 2015 general election.

However, as it is not constitutionally possible for one UK parliament to bind a successor parliament, there is no legal or political mechanism for ensuring that these powers will in fact be devolved under the next Westminster government.


What’s your view?

Tell us what you think from a business / energy perspective.


Scottish Energy News masthead logo for All Energy Apr 2014


All new. All energy. All free. All the time.

Since launch in September 2013, the Scottish Energy News business-to-business daily email newsletter is sent to just under 4,000  individually-named and actively subscribed readers every day.

These daily readers include 75% of MSPs in the Scottish Parliament and scores more in Westminster and Brussels.

In addition, the Scottish Energy News website is now visited by an average of more than 8,000 unique visitors per month (Jul-Sept 2014). While most readers/ subscribers are based in the UK/ Ireland, 10% of readers are based in North America and Japan/China/ Australia.


Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed