The economic viability of the proposed Beauly-to-Denny transmission line would have to be re-evaluated if ministers decide much of the scheme will have to run underground, the first day of a public inquiry heard yesterday.
The project is intended to construct a 400,000-volt transmission line to carry the extra power generated by renewable projects in the Highlands and Islands, such as wind farms and wave generators.
Although it would replace the existing line to the central belt, it is now commonly being described as the largest industrial development proposed for the Highlands since the establishment of hydro schemes 50 years ago.
The development is proposed by Scottish Hydro Electric Transmission (Shetl), a subsidiary of Scottish and Southern Energy (SSE), and SP Transmission (SPT), a subsidiary of ScottishPower.
The former is planning to invest £250m and the latter £70m.
The scheme has attracted 18,000 objections. Many of these have come from individuals and groups who object to the visual intrusion of the 600 pylons, standing 200ft high along the 136-mile route, which would carry the line south through the Cairngorm National Park.
Had the proposal been to put the line underground, much of the opposition would never have materialised.
However, developers have ruled that out as being too expensive and yesterday David Densley, head of regulation at SSE, explained to the inquiry that the proposal had to be submitted and approved by Ofgem, the power industry's regulator, before the firms involved would be allowed to spend the estimated £320m the project will demand.
Mr Densley said: "Ofgem's primary concern is to protect customers.
"It is very keen to minimise capital expenditure by companies because ultimately that finds its way on to customers' bills."
He said the developers had convinced Ofgem the proposal was necessary, efficient and economic. Transmitting the power by way of overhead cables was "demonstrably more economic" than underground the cables, he said.
Ruth Crawford, legal counsel for Highland, Stirling, Perth and Kinross, and Falkirk councils, and the Cairgorm National Park Authority, which are all objecting, suggested there was a degree of flexibility with Ofgem under the relevant regulations.
Mr Densley agreed there was a mechanism to seek permission from Ofgem to spend more by seeking an "asset value adjustment". But if there was a recommendation from the public inquiry that large parts of the new line had to be put underground, that would mean considerable extra costs. In that event, Ofgem was likely to re-test the economic viability of project.
If ministers refused to allow the project to go ahead at all, the developers would still be obliged to offer the renewable energy companies connections to the grid some time further into the future, then go back to Ofgem with revised proposals.
The inquiry, which convened in a Perth hotel yesterday, is not due to finish until December 20. By that time it will have visited Inverness, Newtonmore and Stirling. As such, it is set to be the longest, biggest and, at an estimated £10m, the most expensive public inquiry in Scottish planning history.
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