The Tretton Review was set up by the Scottish Government in early 2018 to conduct a ‘fast-track’ review of business rates for small hydro, specifically the workings of the Plant and Machinery Regulations that sit at the heart of hydro scheme valuations.
The group has met six times during the course of 2018, including visits to a couple of schemes near Kenmore, and is now preparing a report for Kate Forbes MSP, Minister for Public Finances and Digital Economy, who is now responsible for non-domestic rates.
At a time when many other sectors are actively lobbying the Government on business rates, the challenge of getting a fair deal for the hydro sector has become more difficult. Having seemingly won the argument that hydro business rates were excessive back in 2017, we have had to re-win our case before moving on to consideration of how to resolve the problem.
The nature of rating law, stretching back to 1854, creates plenty of obstacles to a neat legislative fix and this has been a factor in a preference on the part of the other Tretton Group members for some form of relief based solution. While the hydro sector is appreciative of the reliefs that have been introduced since the 2017 Revaluation, we are concerned that many schemes will not benefit from the intended reliefs due to State Aid rules and also that the very nature of reliefs will discourage prospective funders of new schemes.
Our focus of late has been to get this message across to key members of the Scottish Government, notably Kate Forbes and Paul Wheelhouse, the Energy Minister, in an effort to recruit them as ‘hydro champions’. The feedback to date has been encouraging but it will be February or March before we discover our longer-term fate.
First meeting of Tretton Review Group
April 30, 2018
The first meeting of the group established by the Scottish Government to conduct a fast track review of the legislation that drives business rates for FIT scale hydro schemes, took place in Edinburgh on 18 April. The review group is chaired by David Tretton FRICS, with the other members being Professor Fiona Grant of Heriot Watt University, Alastair Kirkwood on behalf of the Scottish assessors and Kenny Hunter on behalf of the Scottish small-scale hydro sector. The first session was introductory in nature, with confirmation of the aims of the group and the proposed methodology.
The next meeting takes place on 31st May, when the group will visit two hydro schemes before meeting in Perth to consider a position paper put forward on behalf of the hydro sector which argues that all physical infrastructure should be exempted from rates, with rateable values being determined solely by the underlying rentals for land and water rights.
Future meetings will include a presentation by the Scottish assessors on the approach they take to the valuation of hydro schemes. It is envisaged that the review process will be concluded by September/October, with a series of recommendations being submitted to the Scottish Government; the intention being that any legislative changes can be made in time for the 2019/20 financial year.
Kenny Hunter launches Hunter Hydro Services
March 01, 2018
Scottish hydro professional, Kenny Hunter, has brought an exciting new business to the hydro sector. Hunter Hydro Services is a specialist Operation and Maintenance (O&M) company aiming to meet the needs of hydro scheme owners who want expert technical, commercial and administrative support to get the maximum return from their schemes.
“The majority of schemes currently have fairly loose O&M support," said Hunter, “and there is a growing need for dedicated technical and commercial management to ensure the schemes continue to perform efficiently, while optimising their profitability”.
Relief at last for hydro schemes
February 22, 2018
After the shock of the 2017 Revaluation, a limited relief scheme was introduced by the Scottish Government in 2017/18, limiting the increases experienced by schemes of up to 1MW , however this still left many schemes facing rates bills that threatened their on-going viability. Throughout 2017, a delegation representing the BHA and Alba Energy engaged with the Scottish Government, culminating in a meeting with the Finance Secretary, following which it was announced that a new relief scheme would apply from April 2018, providing 60% relief for all schemes with rateable values of up to £5m. This relief is to apply until the next revaluation, scheduled for 2022, or until there is a change in the legislation determining rateable values for hydro.
Linked to that second scenario was the simultaneous announcement by the Scottish Government that, in response to one of the specific recommendations of the 2017 Barclay Review into non-domestic rates, a ‘fast-track’ review of the Plant & Machinery Order (PMO) as it pertains to small-scale hydro should be initiated.
David Tretton to chair PMO Review
February 22, 2018
Professor David Tretton has been appointed to chair the review into the Plant & Machinery Order (PMO) as it applies to hydro. The review is scheduled to commence in March/April 2018 and it is envisaged that it should produce its recommendations late in 2018, ideally in time to be incorporated into legislation for the 2019/20 financial year.
The Tretton Review group is expected to contain three members, including representatives from the hydro sector and the Scottish Assessors along with an independent member. The hydro sector representative is to be Kenny Hunter of Hunter Hydro Services. Details of other members will be provided on this page as the names are confirmed.
Kenny Hunter receives BHA Award
November 15, 2017
At the annual Conference of the British Hydropower Association, Kenny Hunter became the first recipient of the new annual award to the individual deemed to have made the greatest contribution on behalf of the sector in that year. The award was presented to Kenny at the Conference Dinner by BHA Chair, Adrian Loening.
The winner of the corporate category for contribution to the hydro sector in 2017 was Scottish and Southern Energy for their efforts in managing grid outages.