The Ederline scheme on the banks of Loch Awe had a previous valuation of £98,000, now revised upwards to £405,000.
Many in the hydro industry fear that the Scottish Government has abandoned its green agenda. In 2015, while attacking the UK Government for removing subsidies for renewable energy, SNP ministers removed their own system of support. Alba Energy, representing hydro operators in Scotland, accepted the loss of rates relief and argued that the industry should pay its fair share, in line with other businesses.
What Alba says it cannot accept, however, is the “sudden, exponential increase” in valuations now being applied to hydro by assessors – out of all proportion to the economic realities of these sites. While many businesses in Scotland have suffered relative increases, hydro operators are preparing for bills to double, treble, or quadruple.
Martin Foster, Chairman of Alba Energy, said: “We are not seeking special treatment. We want to know why we have been singled out for special punishment. Hydro is the original renewable energy source: the cleanest, most efficient, least obtrusive and longest-lasting. Yet the Scottish Government has facilitated a rates regime that will cripple the independent hydro industry it once claimed to support – while leaving the big energy companies unaffected.”
Alex Linklater, director of Buckny Hydro, said: “The new rates regime contradicts the Scottish Government’s own energy strategy. Hydropower is not merely crucial to this strategy; it has brought significant growth to some of our remotest rural communities. As independent operators find themselves threatened with punitive levels of taxation, we are seeking Government support, until a longer term solution is agreed. All Alba is asking for is an equitable model of valuation, one that will allow our industry to remain financially viable, while paying its fair share of rates.”
Scottish Assessors responsible for the revaluation have refused to publish a clear account of the method they are using to calculate the new valuations for hydro. Alba is calling on the SNP Government to rectify an indefensible lack of transparency in the light of “extreme perversities” resulting from the assessors’ system.
Alba will be assisting members to pursue formal appeals against valuations for hydros which have been hit by “off the scale” increases. But Government attempts to deflect criticism onto the appeals system are being met with skepticism. An appeal against the Tayside Valuation Board, brought in 2012 (which argued that the assessor had, even then, applied a flawed approach to small hydro) is still awaiting a second determination by the Tayside Appeals Committee – after nearly five years!!
For further information contact Martin Foster at Alba Energy, firstname.lastname@example.org, 07500 902 531, or Alex Linklater, email@example.com, 07956 303 580
The Scottish Government’s draft budget for 2017-18 was announced on in December, 2016, on the same day the Scottish Assessors Association published the draft outcome of the Revaluation of Non-Domestic Rates.
The valuation method is prescribed by Scottish Government legislation (Plant & Machinery order).
In the current rates revaluation, the Scottish Parliament building has had its valuation reduced by 21%; Edinburgh Airport has been reduced by 18%; and Tayside Joint Valuation Board offices have awarded themselves an RV reduction of 16%, resulting in bills being reduced by 24%.
The big energy companies such as SSE and Scottish Power pay business rates under a preferential “cumulo” system, which leaves them with less than 50% per megawatt of the amounts being charged to small hydro.
“Small hydro” is here used to define hydro projects that fall within the Feed-in-Tariff scheme, which includes hydro sites of up to 5 megawatts of generating capacity.
Feed-in-Tariffs were introduced to pay back the development costs of building hydro schemes, but have been calculated by assessors as simple income.
The Rates Revaluation comes at a time that the Scottish Government is being accused of underfunding local authorities.
The ongoing case of Alba versus the Tayside Assessor, first brought in 2012, argues that Scottish assessors are using an inappropriate method to calculate valuations for small hydro.
The appeals system is administered by the assessors (who set the rates) and funded by local authorities (which receive the revenue).
Any updated methodology that might emerge from the ongoing Barclay Review into business rates is not expected to come into force for several years.
The Scottish Government Energy Strategy sets out ambitious targets to reduce carbon emissions by 66% and produce half of Scotland’s energy from renewables by 2030.
Alba Energy is a collective of independent hydro operators in Scotland.