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This document sets out the UK Government’s response to the consultation on the three yearly review of the Hydro Benefit Replacement Scheme and the Common Tariff Obligation. It outlines the Government’s continuing commitment to protect consumers in the North of Scotland and the decision to continue the support provided through the Hydro Benefit Replacement Scheme and the Common Tariff Obligation.
The Government also remains committed to the introduction of GB-wide funding for a Shetland cross-subsidy at the same time that Shetland’s new energy solution is implemented. This will be delivered through the Hydro Benefit Replacement Scheme.
There is a requirement for the government to review the Hydro Benefit Replacement Scheme and the Common Tariff Obligation every three years. This consultation forms part of the review process, and views are invited from any interested parties on whether the schemes continue to meet their policy objectives, provide the right level of assistance to consumers in the North of Scotland and are operationally effective. Views are also invited on the best way to deliver a revised funding arrangement for the Shetland cross-subsidy from around 2019 onwards, which will have the effect of reducing costs for all consumers in the North of Scotland.