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Implications of closure of Blyth A & B power stations

Transmission implications of closure of Blyth A and B power stations

M J O'Carroll       10 July 1999

Comments on the implications of closure of Blyth A and B for the proposed and largely consented Lackenby - Picton - Shipton 400kV transmission line (the LPS line).

Also available as a zip file from the document download page

1. Key points and changes to the case for the LPS line

1.1 The central case for need for the LPS line was based on requirements to connect the large TPL power station on Teesside to the national grid system, in addition to Blyth and other northern generation. TPL was consented in 1989 and the line applied for in 1991, with a view to both operating from 1993. TPL came into full operation on 1st April 1993 and has operated since then on temporary derogation without any impediment due to the lack of the LPS line. This is now more than 6 years' successful operation, against a contractual life of 15 years for TPL.

1.2 To make its case, NGC relied upon security standards PLM SP1 and PLM SP2. However NGC departed from the literal meaning of the standards, substantially and materially in the view of objectors. NGC admitted departing from the standards as written, claiming they did so as "good sense" [IR6.144-6.147; this section reports NGC's view and not the inspectors' conclusions], which had the effect of making the security conditions more stringent and supporting the case for the line. Yet NGC chose not to use their allowed discretion to interpret the standards to reduce the case for the line [IR6.120], or to apply for longer term or permanent derogation [IR6.137].

1.3 The case for the line was based on the imposition of increased Scottish imports in addition to TPL, though there is no obligation to accept increased imports [IR 27.20]. The inspectors found no reason why NGC should not contract for increased Scottish imports and suggested it was in line with government policy to promote competition. There are however strong reasons why not, which the inspectors did not seek or consider. Scottish imports are fundamentally and grossly uneconomic, through excessive losses in remote generation and in long-distance bulk transmission, which are borne by the consumer. Increased imports are profitable to NGC because of market distortion, through both the Pool and non-cost-reflective transmission regulation and charges [TPCR, RES]. See also section 4 below.

1.4 Even including the increased Scottish imports as well as TPL, and all other immediate and foreseen additional loads, it is not disputed that only a single circuit reinforcement would be needed [IR27.25] and this would have some environmental advantage [IR27.26] and the respective merits of single or double circuit reinforcements are finely balanced [IR27.27].

1.5 The latest (1995) public inquiries envisaged two further large gas-fired power stations on Teesside: Neptune (1316MW) and Flotilla (779MW). Neptune was included in the 1992 inquiry but has now ceased to be transmission-contracted. Flotilla was contracted for connection in July 1998. Neither has been the subject of planning/S36 applications. Both would be barred under the present moratorium. The demise of these speculations removes over 2000MW from the foreseen surplus northern generation which might have used the LPS line.

2. The effect of closing Blyth A and B on NGC's case

2.1 The technical case for need for reinforcement was most recently made at the 1995 inquiries by Dr Ian Davis for NGC [ICD1]. He listed Blyth A and B as contributing 456 and 626 MW respectively to north-east generation. That is in total 1082MW out of a total north-east generation capacity of 4442MW. Both North East England and North England (including Cumbria and north Lancs) have generation capacity some 100% surplus to winter peak demand (i.e. double the demand), which is a very excessive and wasteful level (see section 4 below).

2.2 NGC's case examined the net outflow across three boundaries. Boundary 3 encloses TPL and Hartlepool, and is not materially affected by Blyth. This is essentially relevant only to the Lackenby-Picton part of the LPS line (see section 5 below).

2.3 Boundary 2 separates the north east from the rest of England and is crossed by the net export southwards from the north east and Scotland. Here NGC claimed a deficit of 781MW (1079MW) with Scottish imports increased to 1600MW (2200MW). In both cases the limiting circuit was Blyth-Harker. The closure of Blyth would remove the entire deficit in either case.

2.4 Boundary 4A separates North England from the rest of England and is crossed by the net export southwards from North England and Scotland; here a deficit of 1211MW (1706MW) is claimed with Scottish imports increased to 1600MW (2200MW). The limiting circuit is again Blyth-Harker, which is now internal to the region considered. The closure of Blyth A and B will reduce these deficits by 1082MW, and the remaining deficit could easily be accommodated by routine upgrading of the Blyth-Harker line which is in any case due for refurbishment. Remember that these deficits are not in normal transmission capacity, but are security calculations under worst-case double circuit outage coinciding with winter peak demand, which would probably never happen as the double-circuit outage only happens for one minute in seven years, and therefore the inspectors' conclusions [IR.27.24] betray a complete misunderstanding.

3. Unreliability of NGC's submissions

3.1 However, NGC's calculations are made behind the cover of commercial confidentiality. Independent calculations [PDB1] made by Powergen's flow analysis computer programs shows flaws in NGC's use and interpretation of analysis. For example, NGC has counted three circuits as two in order to exacerbate a worst case now as a three-circuit outage, whereas the connection at Norton should be corrected and the co-terminal circuits counted separately.

3.2 There are other reasons to be sceptical about NGC's submissions, such as OFFER's conclusions that NGC had "seriously underprojected its ability to cut costs in the past" [TPCR2.16] and "seriously overestimated its past projections of capital expenditure" [TPCR3.12] in submissions which led to excessive charges and profits. OFFER made these conclusions following independent consultants' reports. It is essential that independent checks are made on NGC's assertions; its calculations submitted to the public inquiries to support its case for the LPS line went unchallenged because they were hidden behind commercial confidentiality and produced as black-box computer output. The report PDB1 was obtained after the inquiries closed and was not submitted to DTI or Secretary of State.

3.3 NGC's economic appraisal of options has also been found to be seriously flawed and misleading, consequent to revelations which emerged through TPCR after the inquiries closed. Among other things NGC suggested levels of constraint costs due to the lack of the LPS line which have proved to be greatly exaggerated and false.

3.4 The report PDB1 deserves close study and is copied with this report. Its summative conclusion is: We can conclude from the results summarised that, while NGC's studies certainly show the need for system reinforcement, some of their results are unrealistic; and that all the problems cited by NGC may be cured without constructing any new transmission lines.

4. Government policy

4.1 Government energy policy is to ensure secure, diverse and sustainable supplies of energy at competitive prices. The "dash for gas" has exacerbated a trend towards gross surplus generating capacity in the far north, destined to serve net demand in London and the south west, the only net importing regions. This trend has negative impact on security, sustainability and price. Losses at large remote power stations are of the order of 50% of primary energy or 100% of electrical output, and transmission from Scotland to London incurs further losses of the order of 20%. The consequent waste of energy arising from the LPS line, facilitating a flow of some 2GW, would be worth over 500 million per year at wholesale grid prices (data and analysis can be supplied).

4.2 Much of that wasted energy could be recovered through CHP and use of the national gas grid. Government policy recognises the advantages of CHP and has targeted it for 10 GWe by 2010. ETSU has further advised that a target of 15 and possibly 17 GWe would be economically viable. The total electricity consumption in England and Wales is only 30GW (averaged over the year) or 50GW at winter peak. The implications even of meeting express government targets are for a major reduction in large remote power stations, and in the northern surplus capacity, in favour of smaller local CHP schemes in areas of demand. This alone will render the LPS line redundant by 2010.

4.3 The closure of Blyth would therefore be compatible with longer term policy, and so would the consequent abandonment of the LPS line. The possibility of closing Blyth and still proceeding with the LPS line might be promoted on a speculative basis, depending on increased Scottish imports and further northern generation, driven by short-term profit incentives for NGC and Scottish Power. However the speculation would be incompatible with longer term government policy and the profits would be derived from market distortion of fundamentally uneconomic activities.

4.4 Government recognises two groups of distortions in the electricity market relevant to energy sources [RES6.2,6.60], namely in the wholesale market and in competition in coal. There is a third which has been overlooked here although it was acknowledged in TPCR, albeit without effective remedy. That is non-cost-reflective charging and regulation, particularly in transmission, which gives false locational signals. In short, new generation is encouraged to locate near the fuel source by subsidised transmission costs and losses, giving a distorting advantage over existing generation closer to areas of net demand. The TPCR took only feeble and ineffective partial steps towards cost-reflectivity, leaving the distortions substantially in place.

4.5 Government policy for renewables also aims for 10GW. One prospect has been mooted for large wind farms offshore in the North Sea. This is very speculative both in economics and logistics and should not therefore be a factor in firm transmission proposals at this stage. The 10GW target will accommodate solar power, waste incineration and other renewables which may be more viable than offshore wind power and better located in areas of demand. Wind power itself is already established on high ground in areas of landscape value in Wales and the north, but is encountering strong opposition (including that from the statutory body the Countryside Agency), and is in its nature restricted to an insignificant and unreliable output of only a few tens of MW. It is extremely unlikely therefore that government policy on renewables will support a case for the LPS line. Rather the reverse is true, since distributed renewable sources will reduce the need for transmission.

5. Options

5.1 There is a zero option for the LPS line, whether or not Blyth is closed. It was falsely appraised in NGC's submissions to public inquiries [ICD1], where it was described as the "unreinforced system as datum". The unreinforced system, and other options which did not include a second Yorkshire line, had increased Scottish imports falsely imposed upon them, so as to fabricate false overloads and constraint costs, whereas such imports would be contractually prohibited as they are conditional upon the installation of a second Yorkshire line. Further, the Lackenby-Saltholme-Norton circuits have now been upgraded to 400 kV. Objectors believe the zero option, coupled with the minor works of turning in the Hartlepool-Todd Point circuit at Saltholme, and without the uneconomic increased Scottish imports, continues to be the best choice, with or without the closure of Blyth. However, DTI supported NGC and a the LPS line was substantially consented.

5.2 The impact of closing Blyth, on top of other changes, might reasonably change the view of DTI and Secretary of State about the need for the LPS line, even though it has been largely consented. Two resisting factors are the irrelevance of Blyth to the Boundary 3 calculations (section 2.2 above) and the expectation of removal of the existing 275kV line through residential areas from Lackenby to Norton. On the first point, the Boundary 3 problems can be cured [PDB1] by upgrading the Lackenby-Saltholme-Norton circuits to 400kV, which has now been done, together with the simpler works of turning in the Hartlepool-Todd Point circuit at Saltholme. On the second point, the affected properties were mainly built or purchased with the 275kV line in place, and the windfall of its removal has no legal or moral imperative, particularly as current government policy supports new building of homes under powerlines.

5.3 However, the two resisting factors together might sustain government approval of replacing the 275kV line with a 400kV connection. This could be achieved in two alternative ways:

(a) a new line over industrial and open land following the Lackenby-Saltholme-Norton route, which is much more direct with much less impact than the 275kV line; this is much shorter than the "northern route" which was rejected in the 1992 inquiries, as the northern route had to arrive at Picton with some impact between Norton and Picton;

(b) teeing the Lackenby-Picton section of the LPS line to the existing 400kV line at Picton.

5.4 The closure of Blyth removes the case for the Picton-Shipton section of the LPS line as far as Boundary 2 is concerned. The Boundary 4a case is greatly reduced even going by NGC's figures, and even that could be cured by reconductoring the Blyth-Harker line, which in any case is due for refurbishment. The case would be avoided entirely if the proposed increases in Scottish imports were limited in winter peak conditions; they could still be allowed up to 2200MW at other times, albeit they are fundamentally uneconomic. A worst case without reconductoring Blyth-Harker and with 2200MW of Scottish imports would be a candidate for derogation, bearing in mind the very rare and hypothetical fault it is intended to cover, the consequences of which would be some fleeting constraint of generation and not loss of power to consumers. The option to abandon the Picton-Shipton section of the LPS line consequent to the closure of Blyth merits consideration.

References (sometimes cited with paragraph numbers):

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Addendum 12.7.99

A1. There was passing consideration of the potential closure of Blyth at the 1992 inquiries. Mr Goldsmith for NYLA had pointed out that the Boundary 2 deficit would disappear in the event of Blyth being closed, but NGC contended that this would not produce compliance with all of the standards [IR6.143], which the inspectors accepted [IR6.190]. In particular, NGC claimed it would not produce compliance with PLM-ST-4, the security standard (Inquiry Transcript Day 52 at page 65 H). However the closure of Blyth did not feature in any of the principal calculations for compliance or in any of the financial appraisals. The non-compliance in the event of closure of Blyth, as considered in the 1992 inquiries, relates to local matters in Teesside, which are dealt with in 5.2 and 5.3 in my report.

A2. The regional question is illuminated by the comparison of generation at vesting and as it would now be with the closure of Blyth. There would then have been a loss due to closure of 2072 MW (Stella 524 + Blyth 5&6 480 + Blyth A&B 1068) and a gain of 1875 MW at TPL, overall a net loss. Apart from increases of Scottish imports, if the system was compliant at vesting then it would be compliant, taking the region as a whole, after closure of Blyth. In other words, the Picton-Shipton section of the LPS line would only be needed, if at all, for the increases of Scottish imports.

A3. NGC has applied a scaling factor of 83% to its PLM-SP-2 calculations at Boundaries 2 and 4a. The same factor applied to the loss of Blyth would marginally tip the Boundary 2 calculation with 2200 MW Scottish imports into deficit, if otherwise using all NGC's claimed figures. However, NGC had not scaled the Scottish imports; if they had, there would be no deficit. PLM-SP-2 does not seek to provide a 100% constraint-free system, and some restriction, contractually or by constraint, on Scottish imports must be a reasonable consideration.

MJOC 12.7.99

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Addendum 17.8.99

A4. The inspectors' report from the 1992 inquiries refers to the possible closure of Blyth as detailed in A1 of Addendum 12.7.99. That report relies on NGC's evidence and in particular the report accepts the conclusion according to NGC's barrister's closing submissions. There was no further probing of the consequences of closure of Blyth, NGC's first line of defence being that NGC must plan according to registered capacity, the second being that if Blyth closed then the system would still not be compliant. There was no inspectors' conclusion or mention in the report of whether such non-compliance, if any, would require a new line or some simpler measures.

A5. It was however accepted by NGC that closure of Blyth would remove the non-compliance south of Picton, i.e. across Boundary 2, as far as security (PLM-SP-2) was concerned. Transcript Day 2 page 39 D to F, reading from NGC 102 sections 79 to 81, say:

"The existing transmission lines which cross Boundary 2 (see Figure 3) would have sufficient firm thermal capacity to comply with PLM-SP-2 but there would still be stability and voltage problems and the system would not comply with PLM-ST-4 and PLM-ST-9."

 and further

"even in the absence of Blyth A and Blyth B installation of series capacitors and SVCs would be required to allow the existing transmission system to be operated following the commissioning of the Teesside Power Station with the attendant technical problems and high costs discussed in Appendices 4 and 6."

However as TPL has now been accommodated on full power for over 5 years without the new line, these problems will have been overcome in practice.

A6. The inquiry report IR 6.143 refers not only to NGC 102 para 80 but also Day 52 page 65H. This is the closing submission of Mr Bartlett, counsel for NGC, responding to points raised by Mr Goldsmith for NYLA. Mr Bartlett says

"… such deficit would disappear in the event of Blyth being closed (Day 14 page 80C) but it would be wrong for NGC to plan other than on the basis of the actual registered capacity (as it is required to do by the Grid Code), and in any event the closure of Blyth would not produce compliance with PLM-ST-4, the stability standard."

he deficit identified at Day 14 page 80C was in fact for the two years 1995/96 and 1996/97. Mr Goldsmith said

"If Blyth is not included in the registered capacity there will in fact be virtually no southbound power flow requirement at all unless further generation is put into zone 1."

A7. NGC 102 Appendix 4 revised, "Voltage, Stability and Technical Considerations", was read by Mr Cleobury at Day 2 pages 28 - 38. This technical section was something of a black box, not least to the inspectors, and not the crux of the case. There was therefore little pursuit of the claims. The Appendix 4 showed that voltage and stability problems are overcome by installing compensation and other equipment, not by building a new line. Implications for costs of NGC's Options were presented, assuming in any case that Blyth A and B were out of merit, so their closure would not affect these calculations.

A8. NGC's cost comparisons were tested against a range of "sensitivities" including the closure of Blyth in Appendix 6 of NGC 102. However none of the Options tested was designed to take account of the closure of Blyth. All Options included either the Picton-Shipton line or an alternative inter-regional reinforcement through upgrading Blyth-Harker or Stella-Harker. In response to the closure of Blyth, other options should be tested, such as those suggested in section 5 of this paper.

A9. In addition to the options in 5.3 (a) and (b), which do not require either Picton-Shipton or Blyth-Harker or Stella-Harker, a third possibility would be
(c) extend the Norton-Saltholme 400 kV line to Greystones and upgrade the 275 kV Lackenby-Hartlepool-Hawthorne line to 400 kV, together with removing the 275 kV Lackenby-Crathorne-Norton line, as discussed at Transcript Day2 page 27B within the scope of Option 4; this is much cheaper than Option 4 since it does not require Picton-Shipton.

A10. The system has changed since the 1992 and 1995 inquiries, and NGC's estimates of constraint costs have now been proved to be grossly exaggerated. Further, the "unreinforced system as datum" for the comparisons was falsely penalised, as were some other Options, by the requirement to carry all the increased imports from Scotland, which is non-obligatory and is prohibited by contractual condition. It was therefore a false comparison. Fair comparisons now need to be made in the present circumstances, taking into account the closure of Blyth and the consequent PLM-SP-2 compliance south of Picton.

A11. At the 1995 inquiries the same Options were compared as in 1992. The relevant evidence was given by Dr Ian Davis in NGC 101. The closure of Blyth was again one of the sensitivities tested, but the comparison again failed to include options appropriate to that closure, and it suffered from the same shortcomings as that in 1992. Indeed these were exacerbated in respect of the distorted estimates of operating and constraint costs, which were in contradiction to data later revealed in the 1996 Transmission Price Control Review and Pool reports. Dr Davis's evidence in chief did not explicitly mention the closure of Blyth, although it highlighted Neptune and Flotilla.

A12. As a more general point, one might look to independent consultants to appraise these arguments with an independent technical analysis, and not to rely on or simply refer to NGC's barrister's conclusions presented to inquiries. It is not sufficient to dismiss the impact of the closure of Blyth on the Yorkshire line as having been dealt with at the inquiries, not least because those very inquiries accepted the consequent compliance of the existing grid south of Picton and in any event identified only stability problems which are more appropriately solved by relatively minor apparatus not requiring a new grid line.

M J O'Carroll 17.8.99

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