The UK Government has announced that it will retain the Hydro Benefit Replacement Scheme in order to save the north of Scotland £50m a year on their energy bills.
The Department of Energy and Climate Change (DECC) said the scheme will protect consumers from the higher distribution costs faced by electricity users in the far north of the UK, when compared with other parts of the country.
The scheme will provide a £36 reduction on an average electricity bill to the 690,000 domestic consumers in the north of Scotland, while 70,000 non-domestic consumers in the region will benefit from the remaining £25m worth of reductions.
DECC said the cost of the scheme is paid for by all domestic and non-domestic consumers across Great Britain, at a cost of less than £1 a year per household.
Scotland Secretary of State Michael Moore said the announcement is good news for the north of Scotland.
"It underlines that the UK Government is not only securing large investments in the flourishing Scottish energy industry but we are ensuring that Scottish consumers and businesses in places like Thurso, Ullapool and Wick are benefiting from spreading the costs of electricity bills across the whole of Britain's large energy market," Moore said.
UK Energy Secretary Edward Davey said the schemes show how Scotland benefits from being part of the UK market.
"The beautiful but sparsely populated and rugged expanse of Northern Scotland means maintaining the electricity network costs much more than other parts of the UK and it is not fair that people from the area should have to shoulder the costs of this," Davey said.
The government said it will also retain a second scheme, called the Common Tariff Obligation, which prohibits suppliers from charging comparable domestic consumers different prices on the basis of their location in the north of Scotland.
Image: The scheme will provide a £36 reduction on an average electricity bill to the 690,000 domestic consumers in the north of Scotland. Photo: courtesy of FreeDigitalPhotos.net.