Why we can't predict energy bills after Scottish independence

People in England and Wales could face cheaper energy bills if Scotland votes yes to independence, according to the BBC this morning.

Sources from the energy industry told the broadcaster that Scotland accounts for a larger proportion of schemes carried out under the Renewables Obligation policy than England and Wales. As well as having more expensive transmission costs (given the large rural networks to the north of Scotland), the sources said this meant that separating the country from the rest of the UK would ultimately reduce costs for bill payers south of the border.

We've asked Ofgem to confirm what proportion of Renewables Obligation schemes are accounted for by Scotland and will update once we get a response.

Even if the claims are correct there are difficulties with predicting future energy bills. We showed last month how claims that Scottish energy bills will go up under independence assume no intervention by the government. While it's likely that Scotland would bear greater energy costs alone, the Scottish government could fund any or all of the difference from public money. In other words, costs to bill payers can be shifted to become costs to taxpayers.