The security and integrity of electricity supplies depends on the reliable operation of power stations and the transmission and distribution networks.

Our Energy Wholesale and Energy Networks businesses operate asset management systems, to ensure plant is operated and maintained properly and that the necessary investments are made to maintain the reliability and integrity of equipment and optimise its lifespan.

During 2010 we achieved an average plant availability of 88% for our power stations, an increase of 10% on 2009, due to the return to service of units at Longannet Power Station following outages to fit emissions abatement technologies.

Plant availability by generation type is shown in the table below.

The reliability of our networks is measured by recording customer interruptions (CI) and Customer Minutes Lost (CML). These figures are compiled from April to March and submitted to Ofgem to include in its annual Electricity Distribution Quality of Service Report.

Our most recent performance figures are published in the Customer section of this report.

ScottishPower operates two distribution systems – Energy Networks North, covering south and central Scotland and Energy Networks South, covering Merseyside, Cheshire and north Wales

Emergencies and Business Continuity

Our power stations, networks and retail businesses all have clearly defined emergency response plans to ensure the safety of staff and members of the public and provide continuity of service.

These plans cover weather-related, technical and environmental emergencies and are tested on a regular basis through exercises. From time to time these exercises include members of the emergency services.

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Energy Security

The long-term security of energy supplies is included in our strategy, with the aim of providing secure, diverse, sustainable and affordable energy for our customers.

Our approach includes investing in lower-carbon generation, investing in networks and working with customers to improve the energy efficiency of their homes.

Investing in Generation

Our investment strategy is geared towards replacing and refurbishing generation plant and reducing our emissions footprint, to build a diverse portfolio that meets the needs of our customers.

During 2010 we progressed investment in new, efficient Combined Cycle Gas Turbine (CCGT) power stations.

These include a 1,200MW plant to replace our existing coal-fired station at Cockenzie, East Lothian, which will close by 31^st December 2015. An application for Section 36 Consent is under consideration by the Scottish Government and in 2010 we submitted a separate application for consent in respect of the associated gas pipeline.

Just outside the reporting period in January 2011, we received Section 36 Consent from the Department for Energy and Climate Change for a 1,000MW CCGT on a site adjacent to our Damhead Creek Power Station, on the Hoo Peninsula, Kent. As part of the project, a plot of land has been set aside for potential development as a Carbon Capture facility.

Following the purchase of a site at Avonmouth, near Bristol, we have been developing plans for a 950MW CCGT and expect to submit an application for Section 36 consent during 2011.

Gas: We operate three large combined cycle gas turbine (CCGT) power stations in England. We are examining further opportunities for CCGT developments, including Damhead Creek 2, and extending our gas storage capabilities at Hatfield Moor.

Wind & Marine Renewables: Our sister company, ScottishPower Renewables continues a programme of major investment in onshore and offshore wind, tidal and wave energy projects. The programme aims to secure 1,800 MW of new renewable energy by 2012 and includes the extension and repowering of existing windfarms.

Nuclear: Through our parent company, IBERDROLA, we have formed a joint venture with GDF SUEZ and Scottish & Southern Energy to pursue the development of new nuclear power stations in the UK. The partnership will also seek to purchase divested assets, if appropriate. Nuclear energy has played a pivotal role in meeting base-load energy demand for decades and in future will ensure the UK can produce sufficient low-carbon electricity to meet customer demand.

Hydro & Biomass: We continue to invest in renewable energy production at our hydro-electric schemes in Galloway and Lanark and our pumped storage power station at Cruachan. In 2010 we continued to use biomass fuels mixed with coal at Longannet and Cockenzie.

Clean Coal: Clean coal will have an important role to play in maintaining security of supply and keeping electricity prices affordable. We are currently working to extend the operational life of Longannet Power Station, finalising a bid to build the UK’s first commercial scale Carbon Capture and Storage project and by investing in clean coal technologies, including Flue Gas Desulphurisation, Boosted Overfire Air and NOx reduction technologies.

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Fuel Supplies

Coal: The installation of environmental technologies at our coal stations means that we are now able to use a greater proportion of Scottish coal. We signed a five-year coal deal with Scottish Coal in 2008 and a three-year deal with ATH Resources in 2009.

Gas: We have contracts in place with Statoil for Norwegian gas and our parent, IBERDROLA, has re-gasification capacity at the Isle of Grain Liquefied Natural Gas importation terminal in Kent. In addition, we operate a gas storage facility at Hatfield Moor, near Doncaster. We received planning consent for a second reservoir to the west of our existing site in February 2010.

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Investing in Networks

Investments in new network technologies help improve the security and reliability of electricity supplies in rural areas served by overhead line networks.

We are investing hundreds of millions of pounds each year in our transmission and distribution networks to support the development of new renewable energy projects, such as windfarms, which will enable energy to be transported from generation sites to population centres.

We are also investing in infrastructure that will support development in towns and cities across central and southern Scotland and Cheshire, Merseyside and North Wales.

Key projects during 2010 included:

• Replacing the substation and 275kV cables at Dewar Place, Edinburgh to secure electricity supplies to Edinburgh city centre
• Establishing a new grid supply point in Glasgow East to support the development of the Glasgow 2014 Commonwealth Games site and subsequent economic redevelopment of the area. The project involves construction of a new 132/33kV substation and installation of extensive 33kV and 132kV underground cables to replace ageing transmission assets
• Electrification of the new Airdrie to Bathgate rail link, which was completed in December 2010
• A 132kV grid connection for ScottishPower Renewables’ Arecleoch Windfarm in South Ayrshire
• A connection for ScottishPower Renewables’ Mark Hill windfarm in South Ayrshire, including a new 275/33kV substation
• A connection for the southern section of Scottish & Southern Energy’s Clyde Windfarm in South Lanarkshire, between the windfarm and Elvanfoot substation

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Working with Customers

Energy efficiency has a significant role to play in managing energy demand, reducing CO₂ emissions and helping customers to reduce their energy bills.

We have a strong track record in customer energy efficiency programmes providing energy efficiency advice and measures. Much of this activity has been delivered through designated Warm Zones, Community Energy Partnerships and alliances with social housing providers.

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