Utilities Bill
8:50 pm

Baroness Sharp of Guildford (Liberal Democrat)

moved Amendment No. 230A:

After Clause 59, insert the following new clause--

:TITLE3:("Determination of performance standards

:TITLE3:DETERMINATION OF PERFORMANCE STANDARDS BY AUTHORITY

. After section 43 of the 1989 Act there is inserted--

"Determination of performance standards by Authority.

43A.--(1) The Authority may from time to time--

(a) determine such standards of performance in connection with the selling of electricity by suppliers to consumers as, in its opinion, ought to be achieved by them and is consistent with their licence conditions;

(b) arrange for the publication, in such form and in such manner as it considers appropriate, of the standards so determined; and

(c) arrange for the publication, in such form and in such manner as it considers appropriate, of an assessment of which suppliers, in its opinion, are failing to meet those standards.

(2) Where a supplier has failed to reach the standards set out in this section, the Authority may order that supplier to pay compensation to the consumers affected.

(3) It shall be the duty of every electricity supplier to conduct his business in such a way as can reasonably be expected to lead to his achieving the standards set under this section."").

Baroness Sharp of Guildford (Liberal Democrat)

In moving Amendment No. 230A, I shall speak also to Amendments Nos. 231A, 266A, 266B and 267A.

This group of amendments relates to the misselling of gas and electricity. They derive from the concern of the citizens advice bureaux throughout the country at the large number of misselling cases with which they have had to deal. Two different sets of problems are dealt with by the amendments. The first set arises from the choice consumers now face from the multiplicity of and from knowingly or unknowingly being switched from one supplier to another and then having difficulty cancelling contracts. In particular, the CABs are concerned about vulnerable people being pressured and misled into switching suppliers. The second set of problems arise from landlords selling gas and electricity supplies at inflated prices.

Let me deal first with the problems that arise from the sheer multiplicity of suppliers. A range of different problems arise. First, there is a problem of suppliers being switched without consent. A number of examples can be given. For example, a citizens advice bureau in London recently reported the case of a client on jobseeker's allowance who came into the bureau because he had suddenly started to receive electricity bills from a different company. He was emphatic that he had not signed up with the new supplier because he had been out of the country for approximately nine months visiting his family in Bangladesh.

Another citizens advice bureau in the north of England reported the case of a client who found that his supplier had been switched after he signed a form which he was told was to confirm that his meter had been read. This is a difficult issue where people are switched from one supplier to another without realising that they have given their consent or, in some cases, without giving consent at all.

Other cases arise where vulnerable people are treated inappropriately. A citizens advice bureau in the North West reported that a client who was profoundly deaf and with limited speech was visited by a doorstep salesman who wanted her to change supplier. She did not understand what she was being asked to do and felt that she was misled into changing supplier. It then took almost three months to restore her original supplier and sort out the billing problems that arose from the transfer.

Another example arose in London, where a client of one of the bureaux with severe mental illness was misled into signing a paper confirming the visit of a sales agent but which was in fact a contract. The client was paying for fuel direct--an arrangement that would have been jeopardised had the bureau not intervened.

Further problems arise with the cancelling of contracts. The citizens advice bureaux have seen a significant number of clients who are finding it difficult to cancel contracts in line with their right to do so. One bureau in the South East reported a client who had come into the bureau after finding it impossible to cancel the contract to switch supplier within the cooling-off period. The company continued to send him bills and made it extremely difficult for him to cancel the contract.

Finally, there is the issue of poor administration. Again, there are examples of people having difficulties. A man over 85 years of age and partially blind and deaf had chosen an alternative electricity supplier. His existing supplier confirmed the cancellation of his contract in the spring of 1999. He then came into the citizens advice bureau seven months later, since he had not received any bills from anybody and was becoming extremely worried about the accumulation of his bills. His new supplier had no record of the fact that it was supplying him.

In another example, a bureau in the north of England reported the case of a client who, having changed suppliers, continued to receive bills from both the old and new suppliers for nearly a year. He eventually visited the CAB in frustration, having received debt recovery actions from one of the suppliers. All these examples illustrate the difficulties being faced by people these days in relation to these matters.

In theory, the providers' licence conditions are intended to prevent companies from using such improper sales techniques. The licences are intended to provide a simple way of cancelling a contract when a customer changes his mind after further consideration. But, in practice, the regulator has taken action to enforce compliance under the licence conditions on only two occasions.

The CAB advised over 140,000 people on utilities issues in the year 1998 to 1999. Many of those clients are low income earners and may be among groups who experience discrimination and consequent disadvantage through, for example, age and disability. It is particularly important for these clients that the sales techniques of gas and electricity providers should not exploit the complexity of and unfamiliarity with the products they are offering.

If the licence conditions were being effectively enforced by Ofgem, these problems of misselling would not have to be raised so often with the citizens advice bureaux. Ofgem has recently said that it will come down very hard on companies who break the licence conditions. However, it is not clear what trigger will be used to initiate such action. It needs to be made clear to all concerned parties that the regulator will ensure that sanctions are put in place in relation to misselling. The CAB evidence indicates the necessity for such sanctions.

The purpose of the first two of these amendments is to put this matter right. Their aim is to beef up the regulator's powers; to ensure that GEMA, in its new form, sets minimum performance standards; to ensure that they are published; and to ensure that a naming and shaming procedure is in place for those undertakings which do not meet minimum performance standards. In addition, they provide for compensation to be paid to those who have suffered. Those are the issues which arise from the problems of choice and the misselling of electricity.

The second set of amendments arises from the on-selling of gas and electricity. The current provisions preventing landlords from selling on such services at inflated prices have failed, due to inadequate enforcement powers. If this overcharging is to be brought to an end, the provisions will have to be reformed and strengthened. Amendments Nos. 266A, 266B and 267A are aimed at probing this particular issue. The amendments are intended to allow the regulator or the trading standards official to pursue resale problems in cases where tenants are unable to pursue the problems themselves. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Like the noble Baroness, Lady Sharp, I shall first discuss Amendments Nos. 230A and 231A and then move on to the other three amendments.

I was glad to have the opportunity of hearing about the examples which the citizens advice bureaux have given of bad practice in the supply of utilities. However, I have to say that there is nothing in the noble Baroness's amendment which is necessary to increase the powers to impose standards of performance under existing sections of the Electricity Act or under the new clauses to be inserted into that Act and the Gas Act by this Bill. Section 39 of the Electricity Act (as amended by Schedule 6 to the Bill) will allow the authority to set standards of performance

"in connection with the activities of electricity suppliers so far as affecting customers or potential customers of theirs".

This clearly encompasses any standards of performance which could be set under the clauses proposed in these amendments. In addition, the noble Baroness will recall that earlier today we dealt with the question of deemed contracts when there is a change of supplier.

The existing clauses in the Bill require the authority to consult before setting standards of performance, so that there will be an opportunity for organisations concerned about misselling to suggest standards of performance in this area. That, of course, includes citizens advice bureaux and the examples which the noble Baroness, Lady Sharp, has provided in this debate. I am sure that Ofgem will have heard what the noble Baroness has said.

In addition, there already are licence conditions on how companies sell electricity. The regulator is under a duty to take enforcement action when these conditions are breached. In future, contraventions of the conditions could also lead to the imposition of financial penalties on the licence holder concerned.

With regard to publication powers that are proposed as part of the new clauses, Clauses 20(4) and 20(5) place the Gas and Electricity Consumer Council under a duty to publish such statistics as it thinks appropriate relating to levels of performance in relation to standards of performance, including any standards of performance concerned with misselling. This duty is unqualified by any consideration of the harm that such publication may cause to the companies concerned.

I do not minimise the concerns behind these amendments. It is clear from the examples given by the noble Baroness, Lady Sharp, that much is to be desired in relation to the way in which some electricity companies supply electricity to their consumers. However, the Bill provides for no fewer powers than she would add to it by these two amendments.

I also recognise the motivation behind Amendments Nos. 266A, 266B and 267A, but I do not believe that in practice they would improve the lot of those whom they are designed to assist.

Let me outline what would happen under the Bill, as drafted, if a customer discovered that he or she was being overcharged by a landlord. It is very difficult, of course, to get people to complain in the first place. Landlords are in positions of authority over tenants and many tenants have difficulty getting past the first barrier of expressing a desire to complain. If a consumer is prepared to take action personally, the powers under Clauses 72 and 101 allow recovery of the sums which have been overpaid, plus interest. If a consumer feels that he needs assistance because he is afraid to raise it with his landlord, the correct body to approach would be the new Gas and Electricity Consumer Council, rather than the authority or trading standards officers. That does not mean that the citizens advice bureaux, local authority advice bureaux and others do not provide a very valuable service.

The council has a duty to investigate complaints and will be able to insist that the reseller, in this case the landlord, provides it with information relevant to the complaint. It will seek a satisfactory outcome by making representations to the reseller. But if this was unsuccessful and the consumer took his landlord to court, it would be open to him to utilise arguments, reports and so on prepared by the council as part of his legal case. I hope that that will occur only in extreme circumstances and that it will not occur often. However, those powers exist.

The Gas Consumers' Council has in the past played an active and successful role in advising tenants on their rights in maximum resale price matters. There is, for example, a booklet which is sent to tenants who are considering making a complaint which can be passed to landlords. The Gas Consumers' Council has corresponded with resellers on behalf of consumers. The new council will pick up this important work on behalf of consumers both of gas and electricity but with the valuable new ability to insist that the reseller provides information relevant to the complaint.

There is no need to revise Clauses 72 and 101 for the purpose of giving the council a role in maximum resale prices. It has this role already by virtue of the powers and functions set out in the Bill. We do not see any need to enable the council itself to receive overpayments on behalf of consumers. It is enough that the council has the duty to investigate complaints and to make representations and provide other assistance on behalf of the consumer. The remit of the council includes exempt as well as licensed suppliers, and so covers landlords, who are likely to be the suppliers in this sort of case.

Also, conditions can be placed on exemptions similar to licence conditions. Failure to comply with exemption conditions could lead to the withdrawal of the exemption. For example, a caravan site which overcharged caravan owners could lose its exemption and its power to intervene between the supplier and the ultimate consumer. A landlord who continued to supply without a licence or exemption would be committing a criminal offence. We have not concluded our consideration of what conditions should be applied to exemptions but they will almost certainly include an obligation to supply information on request to the consumer council in relation to any complaint it is investigating. I hope that if a consumer sought assistance from the authority or from trading standards officers or from the CAB, he would be redirected towards the consumer council.

I entirely accept the motivation behind the amendments. I am grateful--the consumer council and the authority will also be grateful--for the specific examples which the noble Baroness, Lady Sharp, adduced in support of the amendments. However, I hope that she will accept that the powers that she seeks are already available.

Baroness Sharp of Guildford (Liberal Democrat)

I am grateful to the Minister for his detailed reply on these two issues. One of the problems that has arisen in relation to misselling is that while it is recognised that Ofgem has powers, it has used them little to date. It would be good to see it using those enforcement powers rather more rigorously than it has. The new consumer council will have stronger powers of publication and I hope that it will use those powers to name and shame those who missell.

It is a jungle for all consumers. I do not know whether other noble Lords have, like me, been rather amazed at the number of offers that are available and are not clear about what represents good value and what does not represent good value. One can see that this is a big problem, particularly for the more vulnerable groups in society.

As regards misselling, the Minister is quite right to say that there is an imbalance between the position of the landlord who is selling the product at an excessive price and that of the tenant whose only recourse is to go to court. It is good to hear that the new consumer council will have increased powers in relation to such landlords. I hope that publicity will be given to those powers and that the CAB will keep the consumer council informed of events. I also hope that the consumer council will ensure that those who offer advice in the CABs are aware of those powers. In view of the reassurances I have been given, I beg leave to withdraw the amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 231:

Page 99, line 6, leave out ("and (4)") and insert (", (4) and (6)").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I spoke to this amendment with Amendment No. 204. I beg to move.

Lord Kingsland (Conservative)

moved Amendment No. 232:

Page 62, line 7, leave out from beginning to ("an") in line 8 and insert ("electricity suppliers").

Lord Kingsland (Conservative)

In moving Amendment No. 232, I shall speak also to Amendments Nos. 233 and 234. These are probing amendments in regard to obligations in relation to renewables.

Clause 62 allows a renewable obligation to be created; it leaves it open to the Secretary of State to decide upon whom and for what the obligation is imposed. These amendments seek to remove that discretion and to make all suppliers liable to meet the obligation. I should emphasise that the motive for these amendments does not in any way undermine the Opposition's commitment to the measures being introduced to achieve environmental goals and to supporting the development of renewable sources generation.

As currently drafted, the renewables obligation will favour those companies which operate at both ends of the supply chain, owning both supply and generation facilities. Smaller supply companies by contrast, including the innovative new entrants who have brought so much to the market place, could be squeezed out. Vertically integrated companies have the additional generation margin to fund such investment and, by doing so, they could gain significant commercial advantages. In effect, the current approach will compromise the commercial position of independent supply businesses compared with the vertically integrated players.

These amendments will ensure that the renewables obligation is applied equally to all suppliers; and that the application of the obligation will not distort competition between suppliers. I beg to move.

Lord Jenkin of Roding (Conservative)

Amendment No. 235, which stands in my name, is grouped with the amendments of my noble friend Lord Kingsland. The Minister will remember that I raised the issue of the renewables obligation at Second Reading and that I promised amendments; this is the first of the amendments to which I have put my name. I shall not repeat the arguments that I used at Second Reading, but I cannot be quite as brief as my noble friend has been in moving his amendment.

I should like to remind the Committee of what lies behind the amendment. If generators from renewable sources are to meet the targets the Government have set--we shall come to the question of the targets in a moment--they must be able to do two things: they must be able to borrow to finance investment in existing technology for renewables; and they must be able to finance the research and development which will be necessary if the additional sources of renewable energy are to become effective. The fear of those concerned with this issue is that, as it is drafted, the new scheme in the Bill will achieve neither of those objectives.

Since we last debated the Bill we have had the report of the Royal Commission, which was referred to by the noble Lord, Lord Ezra. Although I cannot claim to have studied it in detail in the couple of days that I have had it in my hands, I have read the parts of it which deal with renewables. The Royal Commission makes some fairly strong recommendations--not least at paragraph 7.106, which states:

"We recommend that longer-term targets be set for expanding the contribution from renewable sources well beyond the 10 per cent of electricity supplies to cover a much larger share of primary energy demand".

The main thrust of the Royal Commission's report is that we will not achieve the reductions in CO ₂ unless we take a good deal more vigorous action as a nation and set an example to Europe--and one of those examples is in developing renewables. In Box 7D, in the same chapter, there is an interesting and helpful description of the proposed renewables obligation. It reinforces the point that,

"To enable companies to plan ahead the period of the obligation is expected to apply until at least 2025".

There is a distinction to be drawn between the period of the obligation and the terms of the contracts which the suppliers may negotiate with those who provide energy from renewable sources, and, over the page, it goes on to draw a distinction. It draws attention to the Government's own classification of new and renewable energy technologies.

Those that are near term include biomass residues--which I mentioned in the debate on Second Reading--as well as landfill gas, onshore wind, hydro and what is known as passive solar. As regards the medium term, offshore wind and energy crops are added to the list. In the longer term we reach some of the proposals mentioned in the earlier amendment: fuel cells, photovoltaics, wave and photoconversion. In the very long term we shall see hydrogen, tidal barrage and geothermal hot dry rock.

These technologies are not going to be developed quickly. Indeed, the essence of the conclusions of the Royal Commission is that a great deal of work needs to be done before such longer-term sources of renewable energy will be able to make a contribution.

Another document I have received since we debated the matter on Second Reading is a letter from the noble Lord, Lord McIntosh. It took a little time to get a copy of it into my hands. I do not think that it was his fault, but only a full month after he signed it did I eventually secure a copy--on the third or fourth request. He made two points, with one of which I totally agree:

"As we advance towards the Government's target, currently cheaper sources will almost certainly be insufficient to meet the obligation. The Government is currently considering the responses to its consultation on the energy crop scheme"--

I also mentioned that scheme and I have now received a copy of the consultation.

Perhaps I may say at this point that only 14 days were allowed between publication of that document from MAFF and the closing date of the consultation--from 14th to 27th April. It has become a habit of the present Government; namely, to publish a consultation and then to ask for responses in a wholly unrealistic timescale. Nevertheless, the consultation is complete. I shall continue with my quotation from the Minister's letter:

"The scheme is likely to direct support towards readily exploitable crops such as short-rotation coppice and miscanthus. This will provide the foundation for a substantial increase in the contribution of these crops to meeting the renewables obligations".

The letter goes on to say:

"I should note that the Government is also considering the case for supplementary support for longer-term sources, such as energy crops and offshore wind, in the context of the 2000 spending review".

Clearly, we shall need to wait for the Chancellor's statement before we learn any more about that.

My amendment seeks to give reality to what seem to me to be quite unexceptionable ambitions. Unless an assurance is given of offtake of renewable energy by electricity suppliers, those wishing to invest in renewables simply will not be able to raise the money to fund their investment.

The Minister's letter turned to that argument. Perhaps I may quote from it once more:

"You argued for a renewables obligation which required electricity suppliers to source a specified proportion of renewables from biomass at a fixed price on long term contracts--very similar, in fact, to the existing non-fossil fuel obligation. The Government has very deliberately taken the decision to move away from such picking of technologies"--

I ask the Committee to note that phrase--

"and instead to adopt a market-based approach, in keeping with the Bill's market-based reforms of electricity regulation as a whole. This will allow the market to identify the most economic methods of achieving the Government's renewables target, to the benefit of the environment, consumers and the economy as a whole".

However, that argument is very seriously flawed. With one breath the Government say that they are willing to use grant aid--a scheme is promoted and is the subject of consultation--to support renewables. But what is grant aid if it is not a form of picking winners in order to be able to distribute the grants? Yet in the succeeding breath the Government say that they cannot pick different technologies, as required in my amendment, because it would interfere with the market. I hope the Minister will take note that there is a complete logical inconsistency in that proposition. Both grant aid and picking technologies amount to public expenditure. That is because the Treasury has ruled that any additional electricity costs associated with climate change rather than with electricity supply have to be treated as costs.

The question is: which method will deliver the greatest amount of CO ₂ reduction per pound of public expenditure. The additional administration of setting up a grants structure, together with the normal market response of industries which are dependent on grant aid--which leads to a form of cost inflation--is inherently unlikely to deliver better value for money. I am not in the least surprised to learn from the trade press that there have been calls for the DTI to find, not £50 million, but £150 million per annum for renewable energy grant aid. How many schools or doctors could be funded with that kind of money?

In contrast, my amendment places the additional cost of renewable energy fairly and properly where it belongs: on the electricity consumer. That accords with the well-established and widely respected "polluter pays" principle. It sends the right price signals about energy usage direct to consumers, exactly as was envisaged in the Government's own policy statements in New and Renewable Energy: Prospects for the 21st Century. The document states:

"The Government believes that the additional cost of generation from renewable sources, whilst kept to a minimum, should be met directly or indirectly by electricity consumers. This would ensure that the costs of addressing environmental problems caused by electricity are met by those who create the demand".

That is completely right and proper. Yet, with great respect, that is not the scheme in the Bill. It would be the scheme were the Bill to be amended in the light of my proposal.

I am sure that Ministers will be aware that the availability of near-market generating capacity is limited. The Government will be pushed for time to get the requisite reductions from renewable sources to meet their 10 per cent commitment. The near-market technology is limited by availability of resources and by the very considerable problem of planning consents, about which the Royal Commission has a number of useful things to say.

In anything but the short term, there will have to be further contributions from biomass and from offshore wind if there is to be any chance of meeting the Government's targets. It takes four or five years to plan, finance, build and bring on stream a significant new electricity generating station. It is likely that, without an obligation to purchase electricity from these technologies from the outset, sufficient time will not be available to bring the generation on line and the Government's target will not be met. If it is not, we shall be in breach of our obligations under the Kyoto accord.

The Government have recognised over and over again that the purchase contract lies at the heart of the financing of renewable energy. Perhaps I may quote another government publication which makes that point extremely clear. In financing renewable energy projects, published earlier this year, the Government state:

"The contract is the cornerstone of most renewables projects. The power purchaser must be creditworthy. Lenders will want the contract term to extend beyond the term of the loan. The contract will be assessed by the lenders for its economics and conditions that might cause early terminations--lenders will want the ability to cure any defaults rather than face termination".

Again, that is absolutely right--but, with great respect, that is not what is in the Bill. I find it depressing that the Government have committed themselves to the two propositions that I have quoted from their own publications, and both are ignored in the Bill.

It must be recognised that, if we are to make any progress in achieving our renewables obligations, there must be longer term contracts, and there must be discrimination between the different forms of renewables. At the present stage, the prices at which the different forms of renewables can put electricity into the market are very different.

The Government must look at this again. I do not say that my amendment is the only way of dealing with the matter, but I say with all the force that I can command, reinforced by the Royal Commission, which supports the new system, that it must be on the right terms. It is not on the right terms, and my amendment is one of the ways that could put that right.

Baroness Sharp of Guildford (Liberal Democrat)

From these Benches we give our support to the noble Lord, Lord Jenkin of Roding, and his amendment. The noble Lord speaks a great deal of sense. He is absolutely right that we stand very little chance of meeting our Kyoto commitment to the 10 per cent renewable target by 2010 unless we move very quickly. We do not have the capacity in place. It takes a long time to get it in place, and we need mechanisms to encourage its being put in place.

From the point of view of UK Inc. it is vital that we increase our ability to build renewable energy capacity and develop the industry. Other countries, such as Germany and Denmark, are forging ahead in this area, and we in the UK have been very laggardly. An amendment such as that proposed by the noble Lord is precisely what we need.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

When the noble Lord, Lord Kingsland, says that nothing in his amendments is intended to restrict the growth of supply from renewable sources, I accept what he says, but Amendments Nos. 232, 233 and 234 would have the effect of restricting that supply. They would remove the option to place an obligation only on certain categories of supplier and require it to be placed on all suppliers.

I recognise that concerns have been expressed that the use of the flexibility to impose an obligation on some suppliers and not others could introduce unfair market distortions, but the Government's intention is quite the opposite. It is to ensure that the market works properly. Flexibility may be important in ensuring that inappropriate barriers are not placed in the way of new entry to the market.

If we had exactly those barriers that we would have if the amendments were inserted, how would we deal with new entrants to the markets? Clearly, we cannot impose a full renewable obligation on day one, not least because entrants would have no market share from which to calculate the size of their obligation. We are still consulting on that point. There is one option--it is only an option, and we shall be canvassing views on it--which would be to exempt them from the obligation altogether in their first year of operation. Whatever may be the case, the working of a market of this kind will not be possible if these artificial restrictions, particularly on new entry into the market, are to be imposed.

I find it ironic that I should be the one defending the market mechanism against noble Lords opposite. I do so because we believe that the market mechanism is the right way to approach the issue of renewables, as it is the right way to approach the other issues of consumer protection which form the basis of the Bill. The amendments that the noble Lord has put down would certainly restrict the market; they would restrict new entry to the market by creating unacceptable barriers to new entry.

I turn now to the noble Lord, Lord Jenkin of Roding. His amendment is in some conflict with his very eloquent speech, to which I pay tribute. The amendment seeks to impose a feature of the old-style, non-fossil fuel obligations--fixed, long-term supply contracts between suppliers and generators--which the Government simply cannot accept. It runs counter to the entire thrust of the new obligation to move away from this sort of rigid imposition and allow market participants to sort out for themselves the most effective way of meeting the obligation.

There is nothing in Clause 61 or elsewhere in the Bill to prevent long-term contracts with renewable generators. Clearly, these contracts will be made in some cases. The difference is that it will be the market, not the Government, which decides the right terms of the contract. If the amendment in the name of the noble Lord, Lord Jenkin, were accepted, it would impose conditions for long-term contracts that might outlive the technology described so eloquently by the noble Lord. The noble Lord said that government policy did not address long-term technologies, such as biomass. However, in the context of our market-based approach we believe that the longer-term renewable technologies will also benefit.

As electricity suppliers move towards the 10 per cent target, they are likely to experience insufficient availability of cheaper renewables and will look increasingly to offshore wind and energy crops, for example, to meet their obligations. These energy sources cannot be bought in over night. It would be prudent for energy suppliers to look ahead now to ensure that the technologies are brought forward on a timescale, and in sufficient quantities, to meet their needs.

The noble Lord, Lord Jenkin, referred to the climate change levy. One possibility is to draw some funding from that levy. That was one of the issues referred to in yesterday's article in the Financial Times. Last year the Chancellor announced that £50 million from the climate change levy would be allocated to increase funding for energy efficiency, to promote the development of new sources of renewable energy and to encourage research and development and the take-up of low carbon technologies and energy-saving measures through a carbon trust. In November 1999 the Chancellor announced the trebling of support for energy efficiency measure from £50 million to £150 million to allow for the introduction of a system of 100 per cent first-year capital allowances for energy-saving instruments. Individual funding allocations have not yet been settled. The Government also made an announcement to exempt from the levy energy generated from new forms of renewable energy, such as solar and wind power and good quality combined heat and power plants.

In addition to our plans to impose an obligation on licensed electricity suppliers to supply a specified proportion of their power from renewable sources, the Government are actively considering top-up financial support for offshore wind energy and energy crops, possibly in the form of capital grants. This reflects both the higher costs of those technologies and the importance of bringing them forward if we are to meet the renewables targets in 2010 and beyond.

The noble Lord, Lord Jenkin, appears to believe that there is some conflict between this grant aid and the rest of our policies. No. There is a big difference between direct support for research and development and the long-term framework of the renewables obligation. I am much more sympathetic to the motivation behind the amendment in the name of the noble Lord, Lord Jenkin, than the amendment moved by the noble Lord, Lord Kingsland, which would have a very damaging effect on the renewables obligation. I am afraid that the approach of going back to the long-term contract of the non-fossil fuel obligation is not the right way to proceed.

Lord Ezra (Liberal Democrat)

In view of the fact that the Minister respects the motivation behind the amendment in the name of the noble Lord, Lord Jenkin, who says that he does not necessarily stick to the wording of his amendment, is it not possible to introduce into the order some preference for long-term contracts, bearing in mind the nature of the activity that we are talking about? The noble Lord, Lord Jenkin, is absolutely right. The thrust of the Royal Commission's report is that it will be extremely difficult for us to meet the targets which the Government have rightly set. This matter requires a good deal of long-term planning and thinking. While there is perhaps too much rigidity in the wording of the amendment, is it not possible to emphasise in the order the importance of providing long-term support for the renewables sector?

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I am very dubious about the role of long-term contracts, although I am insistent about the long-term nature of our policies. After all, the renewables obligation is intended to last until 2025. Rather than respond positively in the way suggested, I invite the noble Lords, Lord Ezra and Lord Jenkin, to talk to me and my officials between now and Report stage so that where there is common ground those matters can be thrashed out and we can see whether progress can be made.

Lord Jenkin of Roding (Conservative)

Before my noble friend withdraws his amendment, perhaps I may say that I have been half encouraged by the response and very encouraged by the support of the noble Lord, Lord Ezra, and the noble Baroness, Lady Sharp.

As I said, I am not wedded to the wording of the amendment. However, I wish to emphasise that if one could encourage big industry to come in on this aspect--I do not refer to the little man with his rubbish heap or the family which happens to have a hydro facility--it could result in good, embedded energy. We want to encourage the big players, perhaps from overseas as well as our own people, to make this a major part of their investment. They are not encouraged by grants because they always recognise that they can be switched off at any moment. They are looking for an environment which will encourage them to put their money into the investment and into research and development.

The Minister invited some of us to have meetings with him. It would be exceedingly churlish of me not to take that up with enthusiasm; and I do. Perhaps we can explore that.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I do not want to be exclusive. The noble Lord refers to "some of us". If other noble Lords, including the Opposition Front Bench, wish to discuss these matters, I shall be pleased to do so with them as well.

Lord Jenkin of Roding (Conservative)

I am sure that we should all like to come along. I should like to bring one or two of my advisers who have helped and guided me on this issue. I have not moved my amendment; therefore I do not need to withdraw it. It has been a short and useful debate. I am grateful to the Minister for the amount of trouble he has taken with his reply.

Lord Kingsland (Conservative)

I shall be delighted to talk to the Minister about my amendment. However, after what I shall say he may not pleased to talk to me.

I think it unfair of the Minister to assert that my amendment is anti-competitive. On the contrary, it seeks to ensure that the small entrepreneur is fairly treated in relation to the rest of the market. It is a competition-enhancing rather than competition-constricting amendment. The Minister was clear about his rejection of it. In those circumstances, I should like to test the opinion of the Committee.

Lord Hardy of Wath (Labour)

moved Amendment No. 236:

Page 62, line 28, after ("sources") insert ("or from the application of clean coal technology").

Lord Hardy of Wath (Labour)

In moving Amendment No. 236, I wish to speak also to Amendment No. 238. I do not intend to detain the Committee very long but some significant points need to be made.

The Government deserve congratulations on their commitment to making a proper contribution to clean coal technology. Indeed, a number of other affluent countries would do well to do so and the world would benefit from emulating our record. However, the Government's targets are ambitious. Not all British projects are dispatched effectively. I think, for example, of the repairs to the escalator on the Victoria line at King's Cross Station which seem to be taking a long time. If some of our renewable projects took as long as that, we should be in dire straits in fulfilling our obligations. But I am more optimistic about that.

We must consider that, although we have seen enormous reductions in the British mining industry, that which remains is exceedingly successful. The latest production figures for Richard Budge's pits--he owns the vast majority of them, as the noble Lord, Lord Ezra, will be aware--build on the contribution that the National Coal Board made under his chairmanship. The productivity rates are astonishing. Some coal faces produce 7,000 tonnes of coal a shift. A coal face maintained at that level would be a super-pit, with a 2 million tonne level of production.

The noble Lord, Lord Jenkin, will recall our slight exchange last week on this. I have never been in favour of burning coal in a filthy manner. I am in favour of clean coal technology. I was bitterly critical of the previous administration, who put an end to substantial research. That research should be renewed with vigour because, although we may be reducing our coal burn and no longer puffing out noxious gases into the environment, making those changes will do us and the globe very little good if other huge coal-producing countries continue the practices that we have stopped. Given the amount of coal that will be burned in China, India and a number of other countries over the next five or 10 years, the world is clearly crying out for the new technology. We have a commercial opportunity to develop clean coal technology rapidly in Britain. It would be very useful for us and there would be international opportunities.

The other reason for the Government to take a favourable view on the issue is to ensure a belt and braces approach. I am more optimistic than some in the Opposition about the development of some renewables, but that could take a little time. If it takes a little longer than the Government and the industry hope, there may well be a tendency, as the target dates are reached, to take an excessively generous view of particular approaches to renewable production. It should be possible to move rapidly on biomass and we ought to make a more vigorous effort to harness the power of water, but I am uneasy about wind, largely because, although a great deal is said about it, the amount of energy produced by the wind farms now operating is surprisingly small. I pointed out in the House last week a proposed wind farm near the Yorkshire coast which would not go down well with most local people, would not enhance our landscape and would produce as much energy in a year as Drax power station, which is fitted with flue gas desulphurisation, produces in six days.

The noble Lord, Lord Jenkin, referred to planning consent. Those of us who have lived in coalfield areas know that in the 1980s the previous government virtually forced local authorities in areas where there were coal reserves to give planning permission for opencast mining. That caused enormous fury. As deep mined pits were closed, local people had to put up with opencast mining. I am not saying that there is no role for it--it has cleared a lot of dereliction in South Yorkshire--but no government of whatever complexion should seek to ride roughshod over the local population on issues such as wind farms. There may be a place for them offshore and onshore. But as a conservationist, I find the prospect of seeing huge numbers of birds destroyed by the windmill, as would certainly happen because of the sucking-in action which would develop, distasteful. If those windmills are built on lines of migration, the slaughter would be distasteful, especially given the relatively low energy yield which would then result.

I hope that the Government will accept that clean coal technology should proceed apace, not merely for ourselves but because it will help to give the world a capacity to meet the obligations which the United Kingdom is pursuing and which other countries also need to meet. I beg to move.

Baroness Buscombe (Conservative)

I rise to speak to Amendment No. 241. That amendment concerns the granting of power to the Secretary of State to make different orders for different classes of supplier. We propose here that that power should be invoked only in a way which will not distort competition.

Lord Ezra (Liberal Democrat)

I support the two amendments dealt with so eloquently by the noble Lord, Lord Hardy of Wath. In fact, I have a later amendment which deals with the same subject. It may be for the convenience of the Committee, and perhaps abbreviate the time that we must spend, if I deal now with that too.

I agree entirely with the thrust of the remarks of the noble Lord, Lord Hardy, as regards clean coal technology. We have a very successful coal enterprise. It is much reduced compared with earlier days; nevertheless, it is successful and efficient. We have massive coal reserves and there are even greater coal reserves in the Far East and other developing countries.

The problem that we have is how to burn and use that coal to minimum environmental disadvantage. Clean coal technology offers a way of doing that if we can establish the process.

The Government have recently provided much needed short-term support for the coal industry. But long-term support must also be provided. That should take the form of stimulating the development of clean coal technology which can be done only if contracts are placed for that technology. Therefore, I fully support the case which has been made by the noble Lord, Lord Hardy, that that should be included in the obligation.

Techniques for clean coal technology have been successfully proven in laboratories, and some countries--not Great Britain, unfortunately--have development plants in operation. We really need to get such plants going. I have been working for many years to bring that about. While at the coal board, I gave support to the Grimethorpe project in the 1970s, which some may remember, which was subsequently closed down.

More recently, in 1998, I introduced a Bill,

"to extend the obligation to generate electricity from certain fuel sources".

The purpose of that Bill was to extend the non-fossil fuel obligation, which we then had, to include certain fossil fuel projects which could contribute to environmental improvement and, specifically, clean coal technology. Although that Bill successfully passed through this House and was supported in another place by the then Minister for Energy, as well as by the Select Committee on Trade and Industry, it foundered, as do the bulk of Private Member's Bills at the present time in the other place for reasons with which most of us are familiar.

The Utilities Bill provides a further opportunity for creating the circumstances which could lead to one or more clean coal projects in the UK. Unless there is specific support for those projects or there is a commitment to take their production, they will not come about.

The problem for Britain will become very serious when the nuclear plants are closed down (in the period 2010-20); the whole balance of CO ₂ emissions will be altered by that fact. We must prepare for that now. We should be developing all the resources we can. The noble Lord, Lord Hardy, is absolutely right. While everything possible is being done to develop other renewable sources, we have here potential for the coal industry to make its contribution so long as the technologies can be developed.

So I should like to ask the Government to consider the problem in this context. I do not suppose for one minute that the amendments that the noble Lord, Lord Hardy, and I have moved this evening will be agreed; we merely put down a marker. We say, "This is an issue which should be further considered". This is one of the remaining opportunities for introducing a new technology into coal usage. I very much hope that, one way or another, we shall seize it.

Lord Jenkin of Roding (Conservative)

I hesitate to join in a debate with two such acknowledged experts on the coal industry but, for my sins, for part of my career I was both a shadow Minister and a Minister for energy and I had to deal with the coal industry at that time. I remember 25 years ago visiting the Coal Research Establishment just outside Cheltenham. There I came across a man who was working very hard on the underground gasification of coal. I do not know whether that was a "clean" technology--we did not think of it in those terms. I remember putting my arm round his shoulders and saying, "Do you realise, my friend, that you have the whole of the future of the coal industry on your shoulders?" It was quite clear that we were not going to go on burning large tonnages of coal on the surface.

The noble Lord is absolutely right; it is another country. The resources of coal are huge. I remember discussing this issue with the then head of the energy department in Beijing, Mr Qu Che Ping. They were hoping to burn 1,200 million tonnes of coal, and I said to him, "My friend, you really cannot do that". This was some years ago, long before Kyoto and indeed before Rio. They are changing their view; they are realising that that actually is not on. They are now buying more nuclear energy. We have not said anything much about nuclear energy, but if there is clean coal technology which really can generate energy without polluting the earth, clearly that needs to be encouraged and promoted.

The Royal Commission report talks a lot about what I call--although it does not--the sequestration of carbon dioxide, where the CO ₂ is extracted from the flue gases and put back down. The commission prefers it to be put back down under the sea, where it can remain in perpetuity: it is taken out of the atmosphere. It does not know yet whether that is economic. Clearly more work needs to be done in order to achieve what is needed. I agree that if we are to meet these renewable obligations, everything has to be encouraged. I very much agree with the noble Lord, Lord Ezra, that this needs longer-term backing and preferably contracts if it is to be achieved.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Perhaps I may speak first on Amendments Nos. 236 and 238, which would provide that obligations under the renewable powers could be met by clean coal as well as renewables. Let me start by saying that we certainly are supporters of clean coal. We have a substantial support programme for clean coal technology.

The Government's policy is to encourage the development of cleaner coal technologies for application both at home and overseas. I entirely take the point made by my noble friend Lord Hardy, that research and development on cleaner coal technology will not only benefit the British coal industry but also provide huge export potential for very much larger coal industries in other countries.

The policy is being implemented in a six-year programme, which started in April 1999, linking research and development with technology transfer and export promotion. The broad aim of the programme is to provide a catalyst for UK industry to develop cleaner coal technologies and to obtain an appropriate share of the growing world market for the technologies.

The programme will encourage collaboration between UK industry and universities in the development of the technologies and expertise. It is expected that projects worth over £60 million in R&D will be generated as a result of the DTI's contribution of £12 million over three years. Through this programme the DTI will be able to contribute to a global strategy to contain the growth of carbon dioxide (CO ₂ ), a recognised greenhouse gas, in developing countries in collaboration with the IEA and OECD countries.

The principal aim of the programme is to develop advanced power generation as recommended by the industry-led Foresight Task Force and to help industry meet the Foresight technology targets. Other aims are to encourage fundamental coal science research in support of the Foresight technology targets and to examine the potential for developing the UK coal-bed methane resource and underground coal gasification technology, to which the noble Lord, Lord Jenkin, referred.

The Foresight investigation into cleaner coal technology identified a case for plant demonstration from 2005. This is the issue of the demonstration plant to which the noble Lord, Lord Ezra, referred and to which he has devoted a substantial part of his distinguished career. The Government undertook a detailed review of its cleaner coal technology programme and published their conclusions in April 1999 in Energy Paper 67. The Government undertook to maintain strong support for cleaner coal R&D with DTI funding of £12 million, to which I have already referred.

Government support for demonstration projects is not seen as a priority at present, for two main reasons. First, a number of commercially proven cleaner coal technologies are available to the electricity industry from a number of technology suppliers and licensees in both the UK and overseas. These do not need to be demonstrated again on a commercial scale and subsidised by the UK taxpayer. Information about these technologies, their technical characteristics and economics is well known to the UK electricity industry should it choose to invest in them. Government support is focused on supporting R&D to develop more advanced technologies capable of offering substantial improvements in efficiency and environmental performance.

Secondly, the UK has a number of moderately efficient generating units which offer the electricity industry the option of incremental improvements to existing plant. These include the strategic installation of flue gas desulphurisation in the most heavily used stations rather than investing in new plant. Although the environmental benefits from that are not as good as those obtainable from currently available cleaner coal plant, the difference in cost is not sufficiently great to justify the very large difference in costs between the two approaches.

I have expressed, I hope in some detail, our support for cleaner coal. However, it does not follow from that that we can support the amendments. We must bear in mind the fact that coal is not renewable and the Government do not consider that it could be considered as an alternative to renewables. The amendment would spread the number of technologies which would be available for the renewable obligation. That would dilute the renewable obligation rather than add to it. At present, we have the renewable obligation, the 10 per cent obligation and the expenditure on and research into clean coal on top of that. The renewable provisions are intended to meet environmental objectives. The effect of the amendments would tend to work in the opposite direction, either by displacing renewables directly or by imposing competing demands on the purse of the electricity consumers. We therefore regret that we are unable to support the amendment.

On the other hand, Amendment No. 241 addresses a discrepancy in the Bill. There are provisions in the clauses on energy efficiency, standards of performance and licence modification which place requirements on the Secretary of State or the authority relating to avoiding distorting competition when exercising the powers. It is reasonable that renewables should be treated in that way.

Amendment No. 241 goes too far by ruling out any distortion in competition. We envisage the possibility of some difference in the obligations on new suppliers, which I referred to in discussing the previous amendments, although noble Lords opposite did not care for that. As elsewhere in the Bill, we think that we should be exercising powers so that no supplier should be unduly disadvantaged in competing with other suppliers.

I accept the principle of the amendment, but I ask the noble Baroness, Lady Buscombe, not to move it. We shall come back with our own amendment at Report stage.

Lord Ezra (Liberal Democrat)

I listened with pleasure to the enumeration of the ways in which the Government are helping forward research and development in relation to clean coal technology. However, I was disconcerted by the fact that they take a different view from my own and that of the noble Lord, Lord Hardy, on when we should see a large-scale plant in operation in the UK. Until we have that, we will not have got anywhere with clean coal technology--a technology that is well known.

While more research is desirable and research always leads somewhere, the time comes when we must start producing what the research points to. Unless we can have a production plant here of sufficient size, we shall not obtain the overseas orders; they will go to those countries where such plants exist.

Furthermore, we are offered the opportunity through the obligation to introduce an element of clean coal technology. I do not agree that this proposal will dilute the obligation; indeed, it would add to and strengthen it. It would mean that we are looking widely at all our energy resources to see how we can improve the atmospheric situation. I wonder whether the noble Lord will discuss this issue with the other matters we shall be discussing to see whether we can make headway perhaps in another direction and achieve what appears to be a common objective.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I am sure that this will be on the agenda for the meetings in which we have already said we will take part with interested parties.

Lord Hardy of Wath (Labour)

I am grateful to my noble friend. Obviously the Government are sympathetic. But there is a need for demonstration. I trust that we can discuss that matter and that it will receive favourable consideration. Given the response of my noble friend, we have taken the matter as far as we can at this stage. I beg leave to withdraw the amendment.

Lord Ezra (Liberal Democrat)

moved Amendment No. 237:

Page 62, line 32, at end insert--

("(3A) The renewables obligation shall ensure that 5% of Great Britain electricity requirements shall be met from renewables by the end of the year 2003 and 10% by 2010.").

Lord Ezra (Liberal Democrat)

Amendment No. 237 relates to the renewable obligation which we have been discussing at considerable length. It aims to have printed on the face of the Bill the Government's 10 per cent objective for an increase in renewables by the year 2010.

We were told in informal discussions that there is no need for this amendment; that the Government are fully committed to this objective. We know that they are. But we believe that the issue is of such considerable importance that it should find its place on the face of the Bill. I beg to move.

Lord Jenkin of Roding (Conservative)

I added my name to that of the noble Lord, Lord Ezra, and in doing so I have one clear objective in mind. I have already referred to the need to finance the development of renewable resources. Generators must be able to borrow. One of the ways in which it will be possible to engender in lenders the confidence that this area has a future is by including the renewable targets on the face of the Bill. They would then be part of the law of the land. Lenders would be able to point to that and say, "That is what is going to happen" and would find themselves able to lend the money to the people who wanted to invest it.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Amendment No. 237 seeks to fix the government targets for renewable electricity in statute. The Bill gives the Secretary of State power to place obligations on electricity suppliers and sets the framework for those obligations. This amendment seeks to establish a general target on the basis of which the level of the obligations would be set. The two would not, of course, be the same because some renewables, such as large-scale hydro, will count towards the Government's target but will not count towards an obligation.

Let me make it clear, although I perhaps do not need to in the light of what the noble Lord, Lord Ezra said, that there is no question of the Government going back on their commitment to achieve 5 per cent renewable electricity by 2003 and 10 per cent by 2010, provided that the cost to consumers is acceptable. The only issue before us is whether it would be right to put such figures on the face of the Bill.

We have said that we shall consult further about how the powers under this clause will be exercised. We need to consult on the profile that, so as to reach our target, the obligation will impose on the buy-out mechanism and on the cost to consumers of achieving the obligation. To get the profile right will not be a straightforward matter. We can be sure of doing so only if we listen carefully to the responses from the wide body of expertise in the electricity industry, including the renewables industry, as well as to the views of consumers, who will be paying for it through their electricity bills.

We believe that the provision which the amendment would introduce, namely, that the obligations will ensure a particular target, is wrong in principle and that it therefore has no place in the Bill. However, that does not mean that we resile at all from our commitment to renewable energy.

Amendment No. 247 refers to recycling buy-out receipts. That is an option which has advantages and disadvantages. The primary advantage is that it is an additional incentive to meet the obligation by supplying renewables. One disadvantage is that it could push the price that suppliers are prepared to pay for renewable electricity above the price cap set by the buy-out mechanism, which would impose additional costs on consumers.

The important point for us now is that the Government need to consult further on whether this or another mechanism is the right one. The order-making powers of Clause 61 allow a system of the kind that the amendment addresses, and that is where it should be--in secondary legislation, not on the face of the Bill.

Amendment No. 248 refers to using buy-out receipts as additional support for renewables. We cannot accept that argument. It would undermine the objective of recycling the receipts in the first place, which is to limit the cost to consumers in the event that renewable generation turns out to be more costly than we expect. Of course, the recycling of buy-out receipts to finance specific technologies will create a further subsidy for renewables at a price much greater than we originally intended when the buy-out price was set. If we get the buy-out price and the incentives right, the level of buy-out receipts should be fairly small, which would not be a good way to support renewables.

Therefore, with no derogation from our commitment to renewable energy, I regret that we cannot accept these amendments.

Lord Ezra (Liberal Democrat)

If we are to have a discussion about renewables, I suppose we can widen the agenda to take on board these points.

With regard to the other amendments with which I did not specifically deal, although the Minister did, the Secretary of State is due to make orders dealing with how these repayments should be made. Perhaps we can also discuss whether the ideas that are being formulated fit in with the proposals contained in these two amendments. Having said that, I beg leave to withdraw the amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 239:

Page 63, line 46, after ("32(6)") insert ("or in the definition of "renewable sources" in section 32(8)").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

This is a series of minor government amendments which, with one exception, do not make substantive changes to the renewable powers in the Bill, but make technical adjustments and enable the provisions to be more effectively applied. The one exception is Amendment No. 240 to Clause 62. This states that an order may provide that, to a specified level, underachievement or overachievement in a particular period of a supplier's obligation may be carried forward into a subsequent period. I believe that that is known as "banking and borrowing".

The Government are considering whether to use this power to allow for a small percentage of a supplier's under or over-achievement of his obligation in a given period (probably a year) to be carried forward into the following period. This would help to avoid potential volatility in the market for renewable electricity that might otherwise take place at the end of a period, as suppliers attempt to clear their positions. It will not allow a supplier to escape his obligation. We intend to consult further on how the power should be used.

Amendment No. 239 provides that an order under Clause 61 may determine how the proportion of fossil-derived material in waste that may count towards a renewables obligation is to be calculated.

Amendments Nos. 242 and 243 provide that a "green certificate" may be issued to a supplier as well as to a generator to provide the flexibility which may be necessary.

Amendments Nos. 245 and 246 provide that a different "buy-out price" may be set for different periods within the overall period of a renewables order and may be adjusted for inflation.

Amendments Nos. 251 to 255 provide necessary flexibility in the order-making power under Clause 66 so that an order making transitional arrangement to preserve the existing non-fossil fuel obligation contracts can be made at the same time as the implementation of the new electricity trading arrangements.

Amendment No. 256 allows for an order under Clause 66 to make different provision for Scotland from that for England and Wales. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 240:

Page 64, line 12, at end insert--

("( ) An order may, in relation to any specified period ("the current period")--

(a) provide that evidence of electricity supplied in a later period may, when available, be counted towards discharging the renewables obligation for the current period;

(b) provide that evidence of electricity supplied in the current period may, in a later period, be counted towards discharging the renewables obligation for that period;

(c) specify how much later the later period referred to in paragraph (a) or (b) may be;

(d) specify a maximum proportion of the renewables obligation for any period which may be discharged as mentioned in paragraph (a) or (b);

(e) specify a maximum proportion of electricity supplied in any period evidence of which may be counted towards discharging the renewables obligation for a different period.").

On Question, amendment agreed to.

[Amendment No. 241 not moved.]

Clause 62, as amended, agreed to.

Clause 63 [Green certificates]:

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 242 and 243:

Page 64, line 35, at end insert ("or to an electricity supplier").

Page 64, line 37, after ("station") insert ("or, in the case of a certificate issued to an electricity supplier, a generating station specified in the certificate").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

These amendments were spoken to with Amendment No. 239. I beg to move them en bloc.

Lord Jenkin of Roding (Conservative)

moved Amendment No. 244:

Page 65, line 6, at end insert--

("(2) The Secretary of State shall have regard both to the costs of production of differing sources of renewable electricity and to the implications of fulfilment of the renewables target when setting the differing sums which are to be regarded as discharging the renewables obligation under this section.").

Lord Jenkin of Roding (Conservative)

In view of what has been said already about a meeting, I can deal with this matter briefly. I listened with interest to what the Minister said on the previous group of amendments.

Amendment No. 244 is intended to recognise, and therefore to ask the authorities to recognise, that renewables, certainly in the earlier years, will have many different price levels. The amendment suggests that a distinction should be drawn between what one might call the low cost and the higher cost renewables. There should not be a "one suit fits all" situation.

In the light of what the Committee has just agreed to in a government amendment, that may already be taken into account. However, it is certainly something that needs to be discussed. Those who will have to operate the system and the "buy-out" provision--if I may describe it as that--would think it unfair that the same level of price should be fixed, whatever the gap between the normal energy price, as it were, and the higher price of the renewables.

I also wish to give notice--I may write to the Minister on this matter--that a number of other issues have been raised with me by a rather splendid body called the Association of Electricity Producers, which represents some of the very small producers of electricity as well as some of the rather large producers. It has been involved in negotiations with officials in the DTI and has had some difficulty in getting its points effectively listened to. The association has some very interesting points as to how it could make this market work more flexibly and more effectively. I should like to draw the Minister's attention to those points as well. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I am happy to add this to the agenda for our meeting. I do not fully understand the amendment. The fact that the Secretary of State was contemplating setting different buy-out prices for different technologies would imply, of necessity, that he was having regard to the different costs of different technologies. By the same token, it is not conceivable that the Secretary of State would set different prices without regard to the implications for the level of renewables generation likely to be achieved as a result. But perhaps we can tease out this matter better off-line than in the Chamber.

Lord Jenkin of Roding (Conservative)

With that assurance, I beg leave to withdraw the amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 245 and 246:

Page 65, line 10, leave out ("and") and insert--

("( ) for different such sums in relation to different periods;").

Page 65, line 14, at end insert ("and

( ) for any such sum to be adjusted from time to time for inflation by a method specified in the order (which may refer to a specified scale or index or to other specified data of any description, including such a scale or index or such data in a form not current when the order was made, but in a subsequent form attributable to revision or any other cause and taking effect afterwards).").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I spoke to these amendments with Amendment No. 239. I beg to move.

Lord Ezra (Liberal Democrat)

moved Amendment No. 250:

After Clause 65, insert the following new clause--

:TITLE3:OTHER PROVISIONS RELATING TO ORDERS UNDER SECTION 32 OF 1989 ACT

(" . In making an order and other arrangements under sections 32, 32A, 32B and 32C of the 1989 Act the Secretary of State may also make provision for--

(a) electricity generated by any form of combined heat and power stations;

(b) heat or chilled water produced in association with electricity.").

Lord Ezra (Liberal Democrat)

This amendment seeks to include combined heat and power in the obligation. The reason is that, first, the Government are fully committed to the concept of combined heat and power. I need only quote from the debate which took place yesterday in the other place to indicate what has already been contributed so far to the way in which energy has been saved and the environment improved by the combined use of heat and power. The Minister, Mr Chris Mullin, said:

"The...combined heat and power capacity has already doubled in the past 10 years. It is now reducing energy costs by more than £500 million annually and cutting CO ₂ by approximately 5 million tonnes of carbon a year".

In the course of his remarks he dealt with the question of how the Government will stimulate the further use of CHP under the Utilities Bill. He said:

"I can confirm that the Government are taking powers under the Utilities Bill to set energy efficiency standards of performance obligations on energy suppliers to encourage and assist consumers to use less energy. For the avoidance of doubt, let me say that CHP is defined as a form of energy efficiency".

So it comes into that part of the Bill. He went on to say,

"The Government can also set specific CHP obligations, if they wish to do so. At present, we do not envisage that being necessary,"--[Official Report, Commons, 20/6/00; cols. 317-19.]

because of the other measures.

The purpose of my amendment is to make absolutely sure that the Government have the power to include CHP in the obligation. According to Mr Mullin, that is the case. Perhaps that could be confirmed. I do not press for that to be done immediately but this is a reserve power to be used if the Government's targets for increasing the use of CHP up to the year 2010 are not achieved. It is against that background that I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Joined-up government requires that I should tell the Committee that what Chris Mullin, as a Minister in the Department of the Environment, Transport and the Regions, said yesterday in another place is endorsed by my remarks this evening on behalf of the Department of Trade and Industry. However, because I have not in fact read Chris Mullin's speech, I should prefer to be a little cautious here. I am sure that I will be able to confirm it, but it would be better if I gave that confirmation to the noble Lord, Lord Ezra, in writing rather than did so immediately.

The amendment would provide that the renewables powers under Clause 61 could be used to support combined heat and power as well as renewable generation. The Government fully understand the importance of the contribution that CHP can make--here I may well repeat what was said by Chris Mullin--to our environmental and energy efficiency objectives. We have made provision for it.

However, different approaches are required for CHP and renewables, reflecting their different market positions. CHP is not itself necessarily renewable. It is rather an established technology where what we need to ensure is that there is a level playing field in which it can compete. In the case of renewables, on the other hand, we are looking for the development of new technologies to deliver in the long term electricity which can be produced without damaging emissions of greenhouse gases. It is quite simply a matter of encouraging the new technologies which will protect the planet for our children. This is reflected in the structure for renewables provided for in Clauses 61 to 66.

As I have already described when speaking to Amendments Nos. 192 and 193, other parts of the Bill provide the right framework for CHP by removing barriers to embedded generation. There are additional measures in the Bill which will assist CHP. Fossil-derived CHP can by no stretch of the imagination be considered renewable but CHP which does use renewable sources may count towards the renewables obligation. Thus renewables in general may count towards our new energy efficiency targets under Clauses 69 and 98.

All this amounts to a major programme of focused measures to assist CHP. But I do not think that it would be helpful to regard CHP and renewables as somehow interchangeable and deserving of identical treatment. Both are important. However, as I have said, our objectives in the two areas, though related, are distinct. That is why I ask the noble Lord, Lord Ezra, not to press this amendment.

Lord Ezra (Liberal Democrat)

On the assumption that once the Minister has read the remarks made by his colleague yesterday in another place he will confirm that he agrees with what was said, I am willing to withdraw the amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 251 to 256:

Page 65, line 28, at end insert--

("(za) providing for section 32 of the 1989 Act to have effect, before its substitution by section 61 of this Act, with modifications specified in the order (but if this power is exercised the modifications must include the omission of subsections (3) and (4) of section 32);").

Page 65, line 29, leave out ("as that section had effect immediately") and insert ("made").

Page 65, line 39, at end insert--

("( ) The power in subsection (1)(b) may be exercised both before the coming into force of section 61 and afterwards.").

Page 66, line 19, at end insert--

("but while subsections (3) and (4) of section 32 of the 1989 Act remain in force an order may not provide for anything which would be an offence under section 32(3) to be treated as a relevant requirement").

Page 66, line 25, leave out ("as saved by an order under this section") and insert ("made before the coming into force of section 61 of this Act").

Page 66, line 30, at end insert--

("( ) An order under this section may make different provision for different areas.").

On Question, amendments agreed to.

Clause 66, as amended, agreed to.

Clause 67 [Modification of licences: electricity trading arrangements]:

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 257:

Page 66, line 35, leave out ("1989 Act") and insert ("Electricity Act 1989").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

In moving Amendment No. 257, I shall speak at the same time to Amendments Nos. 259 and 351. Once it has been spoken to, I shall respond also to Amendment No. 258 which is grouped with these amendments.

The government amendments are technical amendments necessary to provide that Clause 67 commences at Royal Assent. Clause 67 gives the Secretary of State powers to change electricity licences in order to implement the new electricity trading arrangements in England and Wales. Commencement at Royal Assent is essential so that the powers can be used in time to bring the new trading arrangements into effect in the autumn. The planned start date for the new arrangements is 21st November. I beg to move.

Lord Kingsland (Conservative)

I shall speak to Amendment No. 258, which has a simple text. It replaces the expression,

"where he considers it necessary or expedient",

with the expression,

"to the extent that it is necessary".

Clause 67 is a very important clause. It gives the Secretary of State wide powers to modify licences. The circumstances in which he can do so are said to be,

"where he considers it necessary or expedient".

What exactly is meant by "expedient"? I can understand when the Secretary of State might think it necessary to make modifications. But, strictly speaking, we ought to read into the expression "necessary or expedient", "necessary or unnecessary but expedient". So we are told that there are circumstances where it is unnecessary to make modifications, but nevertheless it is expedient.

As a good Conservative, I have always been brought up to believe that if it is not necessary to do something, it is necessary not to do it. So I do not recognise circumstances in which it is unnecessary to do something but nevertheless expedient. Would the Minister kindly like to speculate on what "expedient" might mean in the context of this important clause?

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

My starting-point for responding to this amendment is, I hope, the common ground that we are both in favour of the new electricity trading arrangements. The noble Lord nods. That is very helpful. I am grateful for the way in which the noble Lord has spoken to his amendment.

However, I do not see how the amendment is consistent with support for the reforms. Its aim is to narrow the scope of the powers under Clause 67. But the provision has been carefully drafted precisely to ensure that we have the scope to introduce the new arrangements without giving the Secretary of State overweening powers in other areas.

What the amendment would do is put at risk the timely interpretation of the new arrangements by opening the possibility of new lines of legal attack on the use of the powers.

Exercise of the powers is bound to be a matter of judgment, and the judgment has to be that of the Secretary of State. The clause as drafted makes that entirely clear. By removing the reference to the Secretary of State, the amendment would remove that clarity. By substituting "necessary" for "necessary or expedient", the amendment invites challenge as to what lies on which side of the boundary between the two adjectives.

I shall not take up the challenge of the noble Lord, Lord Kingsland, to define "expedient or necessary". The whole point about the provision as drafted is that it is for the Secretary of State to decide what is expedient and necessary, and he is subject in the end to the provisions of administrative law.

I hope that the amendment does not reflect a fear that somehow the Government will decide to use the powers for some purpose other than introducing the new trading arrangements. That would be completely unfounded. In the cause of avoiding the possibility of legal challenge to the new trading arrangements, I hope that the noble Lord will not press his amendment.

Lord Kingsland (Conservative)

Before the noble Lord sits down, I entirely accept that it is necessary to include a clause of this kind in the Bill for the purposes which the Minister has clearly outlined. However, that is not the issue. The issue is: to what extent should the Secretary of State's power be constrained on the face of the Bill?

If one holds a licence, one is likely to have acquired it by spending a sum of money; and to have spent a great deal more to comply with its terms. If the Secretary of State suddenly says, "Even though you have acquired this licence, I now have to change the terms on which it was acquired", one is entitled to know as clearly as possible how widely he can cast his changes.

My worry about "expedient" is that it is an expression that is almost not susceptible of judicial review. A licence is economically, if not in law, tantamount to an item of property, albeit constrained by a term of years.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I do not think that that is the case. I oppose the amendment on the primary ground that it would remove the phrase,

"where [the Secretary of State] considers it necessary".

But I will think about the "necessary or expedient" issue, without any commitment, between now and Report.

Lord Kingsland (Conservative)

I am much obliged to the Minister.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 259:

Page 67, line 25, leave out ("commencement of this section"") and insert ("passing of the Utilities Act 2000."

(2) This section shall come into force on the passing of this Act.").

On Question, amendment agreed to.

On Question, Whether Clause 67, as amended, shall stand part of the Bill?

Lord Ezra (Liberal Democrat)

The clause gives the Secretary of State powers to make licence modifications relating to the new electricity trading arrangements. The reason why my noble friend Lady Sharp of Guildford and I have indicated our intention to oppose the Question that Clause 67 stand part of the Bill is to draw attention to the serious problems which the smaller generators are likely to face, particularly involving renewables and combined heat and power, as a result of the proposed balancing and settlement code, which forms a crucial part of the new electricity trading arrangements.

The present arrangements under the electricity pool provide a relatively benign environment for smaller companies. They place few demands on participants in terms of fulfilment of the existing levels of activity. For example, a wind generator expecting to produce a level of output that in the event it could not provide would not be penalised in the pool for non-delivery.

However, NETA introduces an entirely different trading philosophy. In future participants would be expected to enter into prior contracts for the physical delivery of electricity, and they would be penalised to the extent that they could not produce all the electricity committed under their contract, or if they produced an excess amount. The operator would receive a low price for excesses--this is called the system sell price--and pay a high price to buy back shortfalls, known as the system buy price.

Given that it is virtually impossible for, say, a wind farm to predict its output, it cannot safely contract in advance to sell it. It is therefore seriously exposed to the penalties under NETA. Larger companies, with their much larger scale of operations, can reduce these risks very substantially.

The question is how, if at all, NETA's objective can be preserved for the bulk of operators, particularly the large ones, with some mitigation for the smaller ones, particularly those producing renewables and operating CHP, which cannot, by the very nature of their business, forecast accurately their production.

I have written to the Minister about this, and have made a suggestion, which is that for specified generators, which would include those based on renewables and CHP, there would be a third price, to be known as the system average price--the average of the buy and the sell prices. It would not remove all the difficulties which smaller operators would face but it would reduce them substantially. I have indicated to the noble Lord how it might be done. The proposal would not involve an amendment to the Bill but would be part of the settlements code. I have provided the Minister with some wording and indicated where it might be inserted into the code. I should be glad to know whether the noble Lord is prepared to consider that proposition.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I am most grateful to the noble Lord for writing to me with his proposal to amend the balancing and settlements code. I do not know whether Members of the Committee have seen that code; it is a terrifying document of incredible complexity about six or seven centimetres thick. The noble Lord has concerns about the effect of imbalance pricing on renewable and combined heat and power generators; in particular, those with an unpredictable output. The Government are consulting on the code and will consider the noble Lord's proposal carefully in that context along with other responses.

The consultation closes on 14th July and I am not in a position to give more than a preliminary reaction to the proposal. We are conscious of the concerns that have been raised, particularly in relation to unpredictable output. For that reason we have developed mechanisms for aggregation which will allow a licence-exempt generator to share the risk of imbalance with other generators, thereby reducing the overall risk to itself. We are confident that the mechanism is a practical one and that smaller generators will find it of significant benefit in minimising imbalance charges. We have consulted on raising the licence exemption threshold from 50 to 100 megawatts which will increase the number of generators for which the aggregation option is available.

The Government will make an announcement on the results of the consultation. We are determined that the new trading arrangements should correct the distortions in the current market arrangements identified in the 1998 White Paper. A significant distortion is the failure of the market properly to reward flexible plant. The new arrangements will ensure that it is properly rewarded. I should note that that includes renewable and combined heat and power plant. But it must follow that plant that lacks flexibility or predictability will be less well rewarded. The mechanism for achieving that is precisely the imbalance arrangements targeted by the noble Lord's proposal. Therefore, there are difficulties about the noble Lord's proposal to which this is only a first reaction. The noble Lord's proposal will be considered, together with others, very carefully. If we have more to discuss with the noble Lord we shall certainly seek an opportunity to do so.

Lord Ezra (Liberal Democrat)

I thank the noble Lord for his helpful response.

Lord Borrie (Labour)

moved Amendment No. 260:

After Clause 67, insert the following new clause--

:TITLE3:ARRANGEMENTS FOR SUPPLIERS OF LAST RESORT

(" .--(1) In this section "last resort supplier" means a supplier required by or under that supplier's licence to supply electricity where circumstances have arisen which would entitle the Director to revoke or suspend the licence of another supplier otherwise than with the agreement of that other supplier.

(2) The Secretary of State may by regulations make modifications of any enactment (including an enactment contained in this Act) for the purpose of implementing, or facilitating the operation of, arrangements relating to last resort suppliers.

(3) The power of the Secretary of State to make regulations under this section shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

(4) The power of the Secretary of State under subsection (2) may not be exercised after the end of the period of one year beginning with the commencement of that subsection.

(5) After section 15A of the 1989 Act there is inserted--

"Licence modifications relating to arrangements for suppliers last resort.

15B.--(1) In this section "last resort supplier" means a supplier required by or under that supplier's licence to supply electricity where circumstances have arisen which would entitle the Director to revoke or suspend the licence of another supplier otherwise than with the agreement of that other supplier.

(2) The Secretary of State may, in accordance with this section, modify the conditions of a particular licence granted under section 6(1)(c) and 6(2) where he considers it necessary or expedient to do so for the purpose of implementing, or facilitating the operation of, arrangements relating to last resort suppliers.

(3) The power to modify licence conditions under subsection (2) includes power to make incidental or consequential, or transitional, modifications.

(4) Before making modifications under this section the Secretary of State shall consult the holder of any licence being modified and such other persons as he considers appropriate.

(5) Any consultation undertaken by the Secretary of State before the commencement of this section shall be as effective, for the purposes of subsection (4), as if undertaken after that commencement.

(6) The Secretary of State shall publish any modifications under this section in such manner as he considers appropriate.

(7) The power of the Secretary of State under this section may not be exercised after the end of the period of one year beginning with the commencement of this section."").

Lord Borrie (Labour)

We have already discussed today in Committee that from time to time, and inevitably under the more competitive conditions that now exist, a supplier may fail and cease to trade and his licence must be suspended or revoked. Without some kind of special provision there is a risk that customers will be left without the supply of a vital fuel. As far as concerns gas, the Gas Act 1986 provides adequately for such a situation by ensuring that another supplier, or supplier of last resort, is appointed to take on the old supplier's customers. Those customers are deemed by the regulator (as the Act puts it) to have a contract with the supplier of last resort.

This very day in Committee the Government, through their amendments to Clause 31 and Schedule 4, have created a similar arrangement in the supply of electricity. However, there is a risk of failure of supplier before the relevant clauses of this Bill commence and the new licence arrangements come into force, which I believe--the Minister will correct me if I am wrong--will be the spring of 2001. With regard to gas customers, safeguards exist, but for a period there is uncertainty for electricity customers.

In electricity, the present arrangements allow for the regulator to nominate a supplier of last resort, but they depend on customers taking the initiative to sign up for supply with the second supplier or supplier of last resort. If they do not do so, they can be disconnected and the supplier of last resort could have problems claiming his proper charges. Hence the amendment would enable the Secretary of State to create interim licence arrangements and obligations based on deemed contracts. That would assist in situations of failure by the original supplier before the new standard licence arrangements can take effect under the Bill. The Secretary of State would have power to modify licences to create more robust supplier of last resort arrangements.

It is a modest amendment. It is time limited until new licence arrangements come into effect. I hope that the Government will look favourably upon it. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I well understand the point the noble Lord makes: that the supplier of last resort arrangements which we have already been debating should be expedited ahead of the implementation of other licensing aspects of the Bill.

We accept the importance of making arrangements for the appointment and financing of suppliers of last resort. That is why we have made provisions in the Bill--we discussed some of them today; the noble Lord referred to them--and draft standard licence conditions to replicate the arrangements which already exist in gas. As I am sure the noble Lord is aware from his position with Ofgem, we have consulted publicly on them.

We have had full competition in electricity supply for more than a year. If there had been an urgent requirement for licence conditions to establish arrangements for a supplier of last resort, the Director-General for Electricity Supply would have been able to use his existing powers under Section 11 of the Electricity Act to modify electricity licences in an appropriate way.

I accept that he could not have included a levy to recover the costs of the person appointed as supplier of last resort. But alternative arrangements could if necessary have been found to address that point pending passage of the Bill. As referred to in earlier discussion, the levy is a last resort of last resort of last resort.

In any case, the Government do not believe that the amendment will make any significant practical difference. So far as I am aware, we are all agreed on what the supplier of last resort measures should be. We intend to establish these, along with the other standard conditions of licences, as soon as possible. I hope that the noble Lord will not press the amendment.

Lord Borrie (Labour)

I am grateful to the Minister. At this hour of the night I can do no more than read his remarks in Hansard and consider whether I need to pursue the matter; or whether, as he suggests, it is not essential, necessary or expedient to press it further. I beg leave to withdraw the amendment.

Lord Ezra (Liberal Democrat)

With debate on Clause 68 I should like to speak also to Clause 97. These two clauses deal with help for disadvantaged groups of electricity and gas consumers and therefore touch on the question of fuel poverty.

Fuel poverty affects some 4 million to 5 million households out of a total of 22 million. It is, therefore, a major problem. It arises from a combination of inadequate housing and low incomes. The Government have taken a number of measures to improve energy efficiency at the lower end of the housing spectrum. The new home energy efficiency scheme aims to insulate 250,000 houses a year.

The energy efficiency standards and performance scheme, which is dealt with in the Bill, will add further to energy efficiency, especially in low income households. But, as stated in the latest report of the Royal Commission on Environmental Pollution, to which much reference has been made today, there is a pressing need for a further expansion of government programmes for raising energy efficiency and increasing warmth in low income homes. At the present rate, it would take some 20 years to deal with the problem, assuming that it gets no larger. We need to have an objective of dealing with the problem in not more than five years.

While much needed home energy improvement has been carried out, the low income aspect of fuel poverty also needs to be dealt with. All pensioner households are now entitled to £150 fuel payment each winter. While that is helpful, something more fundamental is required. At Second Reading I referred to the law recently introduced in France to provide disadvantaged consumers with specially low-priced fuel. I was advised by the Minister that that was not possible in Britain.

However, I believe that there is another way of achieving this result. TXU, which was formerly Eastern Electricity, has produced an imaginative scheme for assisting pensioners and persons on income support. This is known as the "Staywarm" scheme and has been piloted in the Barnsley area, where it has been estimated that some 300,000 people are in receipt of income support.

The basis of the scheme is to guarantee to those who sign up gas and electricity at the lowest price in the area. An estimate would be made of their likely annual requirements based on the size of the house and the numbers in the family. A weekly payment would be calculated and would be paid irrespective of the amount of fuel actually used. Thus, if there were a really hard winter there would be no need for these low income households to deprive themselves of warmth. They could use as much as was necessary to keep them warm and pay no more for it.

TXU estimates that such a scheme could save users approximately £120 on the typical energy cost of £500 a year and there would be a guarantee of warmth whatever the weather. They consider that they can achieve this desirable result through reducing the debt risk as a result of regular payments.

At a meeting which I had with them, they advised me that the prices charged under the scheme could be still further reduced if the DSS could be persuaded to deduct the weekly payment from benefit and transmit it to the company. That would eliminate all risk of bad debt and substantially reduce the costs of the operation, generating savings which TXU would be ready to pass straight on to the user.

It seems to me that this is a very imaginative scheme which needs to be encouraged. There is a way in which the DSS, without adding any government expenditure, could help. TXU realises that other supply companies would want to follow the same scheme in other parts of the country and it is quite prepared to accept the competition. Therefore, I suggest that the scheme should receive serious consideration in order to overcome the problem of households on low incomes freezing in winter.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Once again, the noble Lord, Lord Ezra, has approached the Committee stage in a constructive way. He has expressed general support for Clause 68 and therefore I shall not embark on a general defence of it. The noble Lord advocated a particular project, the TXU "Staywarm" tariff and made a suggestion about it and it is that to which I shall respond.

It is correct that it is an innovative approach both to energy retailing and to providing assistance to the fuel poor with their energy costs by offering them a very low tariff. The pilot of the "Staywarm" scheme was launched on 17th May by Helen Liddell, the Minister for Energy and Competitiveness in Europe, and therefore our involvement with it is well established.

Because the noble Lord has done so, I shall not set out the details of the scheme, except in so far as the payment is concerned. Ideally, customers will pay by direct debit but a weekly or fortnightly cash facility will be available via post offices. The pilot, which is taking place in Yorkshire in an area between Leeds and Sheffield, is intended to find out what are the best methods for attracting customers.

The noble Lord, Lord Ezra, now suggests that there should be direct payment by the DSS in developing the new scheme. The problem which we have not resolved at present is that that would involve considerable manual processing by the Department of Social Security. There is a DSS scheme called Fuel Direct, which presently is used as a last resort for benefit claimants who are in need of protection against disconnection or court action. It is available only to people who receive income support and jobseeker's allowance (income-based).

Fuel Direct is a manual addition to the benefits payments system. If it, or direct payment to TXU Staywarm, were to become a standard feature, it would involve substantial costs to the DSS, particularly in new computer systems. The DSS would also be obliged to make the facility available to others. Clearly, it could not be for TXU's exclusive use.

Staywarm offers assistance to a wide range of low-income households, many of whom are on benefits which are not paid by the Benefits Agency and would not be included in the Fuel Direct payment arrangements. Ofgem has a specific working group as part of its follow-up to the Social Action Plan whose remit is to consider whether and how Fuel Direct might be simplified and extended. That work will feed into the ministerial group on fuel poverty, which includes a DSS Minister.

I suggest that the additional evidence given by the noble Lord, Lord Ezra, in his suggestions should be fed into that ministerial group. I shall undertake for that to be done in the hope that the difficulties that I have outlined can be overcome at some point in the future.

Lord Ezra (Liberal Democrat)

I thank the noble Lord for his positive response that my suggestion will be taken forward. With that, I beg leave to withdraw the Motion.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 263 and 264:

Page 69, line 20, leave out ("specified in or determined") and insert ("to be determined by the Authority").

Page 69, line 28, leave out from beginning to ("must") in line 29 and insert ("Where the Secretary of State specifies in an order under this section an overall energy efficiency target in relation to electricity distributors and electricity suppliers on whom obligations are imposed under the order, the Authority shall determine energy efficiency targets under the order in the manner it considers best calculated to result in the achievement of the overall energy efficiency target so specified.

(3A) The energy efficiency targets determined by the Authority for the purposes of an order under this section").

On Question, amendments agreed to.

Clause 69, as amended, agreed to.

Clause 98 [Energy efficiency requirements for gas transporters and suppliers]:

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 265 and 266:

Page 103, line 21, leave out ("specified in or determined") and insert ("to be determined by the Authority").

Page 103, line 29, leave out from beginning to ("must") in line 30 and insert ("Where the Secretary of State specifies in an order under this section an overall energy efficiency target in relation to gas transporters and gas suppliers on whom obligations are imposed under the order, the Authority shall determine energy efficiency targets under the order in the manner it considers best calculated to result in the achievement of the overall energy efficiency target so specified.

(3A) The energy efficiency targets determined by the Authority for the purposes of an order under this section").

On Question, amendments agreed to.

Clause 98, as amended, agreed to.

Clauses 70 and 71 agreed to.

Clause 72 [Maximum prices for reselling electricity]:

[Amendments Nos. 266A and 266B not moved.]

Clause 72 agreed to.

[Amendments Nos. 267 and 267A not moved.]

Clause 101 agreed to.

[Amendment No. 268 not moved.]

Clause 75 [Gas transporters]:

[Amendments Nos. 269 to 273 not moved.]

Clause 75 agreed to.

Clause 76 [Restriction on use of certain pipe-lines for providing a supply of gas]:

Baroness Buscombe (Conservative)

moved Amendment No. 274:

Page 74, line 34, at end insert ("having regard to any guidelines drawn up by the Authority from time to time in consultation with gas transporters and to the provisions of section 7(8)(b)").

Baroness Buscombe (Conservative)

The aim of Amendments Nos. 274 and 275 is to clarify the provisions of Section 10 of the Gas Act 1986, which applies to the laying of pipes by owners or occupiers of premises. That area of the gas connections market has become known in the industry as the self-lay market, providing consumers with an alternative to the gas transporters supplying and laying the pipes. Gas transporters are required to connect such pipes to their system, provided that they are satisfied that the pipe laid is fit for the purpose.

Section 10(6) of the Gas Act 1986 provides a swift transfer mechanism for the ownership of the pipe and rights and liabilities relating to it by vesting the pipe in the transporter at the time of connection. That reduces the costs involved in otherwise transferring legal ownership.

In many cases, the owner or occupier will not lay the pipe himself, but will engage a self-lay contractor. The aim of the amendments is to make it clear that the vesting provisions apply equally to a pipe laid by a self-lay contractor on behalf of the owner or occupier. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I am grateful to the noble Baroness, Lady Buscombe, for restricting my speaking notes on this group, but I should say a word about the purpose of Clauses 75, 76 and 77. I shall try to do so without referring to the amendments that have not been moved.

The provisions will end the geographical exclusivity of gas transportation licences, which was an important, if technical policy. I shall explain geographical exclusivity and its effects in a moment, but first I shall summarise the Government's two-fold motivation for the policy: to reduce barriers to entry, thus increasing competition and driving down prices to the benefit of consumers; and to assist with compliance with the European Union gas directive.

Public gas transporter--PGT--licences are currently geographically exclusive. Under Section 7(2)(a) of the Gas Act 1986, any given area may be within the authorised area of only one PGT and only that PGT may convey gas through pipes to premises in that area. In other words, we have a series of local monopolies. The main purpose of Clause 75, which has been agreed to, is to end geographical exclusivity by removing the requirement that PGT licences may not include areas that are specified in the licences of other PGTs.

It is no surprise that transporters object to that policy. It will increase competition for them and we hope that it will reduce the prices they can charge. Incumbent monopolies do not like that sort of thing but the Government want consumers to benefit from increased competition.

Amendments Nos. 274 and 275 seek to amend Clause 76 which concerns the transitional issue of how to deal with pipes laid by transporters outside their authorised areas in the past. At present, gas transporters may have other transporters' pipes passing through their authorised areas in order to get gas to the other side. Such "pass-through" pipes cannot currently be used by their owners to give a supply of gas to premises.

Now that Clause 75 will end exclusivity of authorised areas, the pass-through pipe could conceivably become a threat to the incumbent transporter. We feel that this could be unfair. Clause 76 therefore provides that the consent of the first transporter is required if a pass-through pipe which was built before the abolition of geographical exclusivity is to be used for giving a supply. If the first transporter refuses consent or fails to give it, the authority may intervene and override that refusal.

As a general rule, we are trying to place broad duties on the authority but then not be too prescriptive about how it carries them out. Therefore we have not put on the face of the Bill detailed considerations about when to override a refusal to give consent. Amendment No. 274 would change that, reverting to the highly specific tests currently found in subsection (8)(b) of Section 7 of the Gas Act to which the noble Baroness, Lady Buscombe, referred. The clause as drafted is flexible enough to allow the authority to respond to changing circumstances. If the amendment were to be accepted, that flexibility would disappear.

Amendment No. 75 relates to Clause 77. That deals with some of the consequences of the abolition of geographical exclusivity. It covers the procedures to be followed when one transporter wishes to lay pipes within 23 metres of another transporter's pipes and inserts a new version of what is known as the 23-metre rule into Section 22A of the Gas Act.

Clause 77 provides important safeguards to deal with the consequences of the removal of geographical exclusivity, which Amendment No. 275 would remove, leaving in place the current provisions of Section 7, which are inappropriate to deal with overlapping authorised areas. I am afraid that the Government cannot accept those amendments.

Baroness Buscombe (Conservative)

I thank the Minister for his response. There is no question that this area is causing great concern in the industry. I shall read carefully in Hansard what the noble Lord said and we may consider returning to this on Report. On that basis, I beg leave to withdraw the amendment.

Baroness Buscombe (Conservative)

moved Amendment No. 276:

Page 76, line 8, at end insert--

("( ) In subsection (1)(b) after "premises" there is inserted "or by a person other than the transporter acting on behalf of the owner or occupier".").

Baroness Buscombe (Conservative)

In moving this amendment, I shall speak also to Amendments Nos. 277 to 280. The amendments seek to clarify certain consequences of subsections (4) and (5) of Clause 79 which were inserted as amendments in Committee in another place.

Once the pipe is connected, the gas transporter will take over all responsibilities for the maintenance and subsequent renewal of the pipe. It will also take over responsibility, subject to any indemnity it may reasonably require, for any remedial reinstatement of the highway, should that be needed.

The amendments do not seek to alter that situation. However, gas transporters enjoy certain powers which are not available to private individuals when excavating streets. In particular, planning permission to lay the pipe is deemed to be granted and gas transporters do not need to obtain individual streetwork licences to break open the street, lay the pipe and retain it in the street.

These amendments seek to clarify that, once the transporters have connected the pipe, any issues over whether planning permission or a street works licence should have been obtained or complied with by the owner or occupier will cease to affect the transporter, but will not affect the ability of the planning authority or the highway authority to take action against the owner or occupier.

This provision avoids the need for long-term indemnities from the owner or occupier or contractors which would otherwise inhibit competition in the laying of surface pipes. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Am I right in thinking that the noble Baroness was speaking only to Amendments Nos. 276 and 280 or was she speaking to the whole group--the ones in between?

Baroness Buscombe (Conservative)

I apologise to the Minister. I was speaking to Amendments Nos. 276, 277, 278, 279 and 280.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

I am grateful. Amendments Nos. 276, 278 and 279 all cover the same ground, and I am afraid that they are all completely unnecessary. The current drafting of the Gas Act differentiates between pipes laid by a transporter and pipes laid by the owner or occupier of premises. It would be absurd to interpret the existing words as meaning that the householder has physically to dig the hole and lay the pipes with his own hands. That would be to deny the vast majority of people--that is to say those who are not gas pipeline experts--the opportunity to exercise the right in subsection (1)(b) of section 10 of the Gas Act to have a pipe laid by them connected to a transporter's main. And of course making this obvious interpretation explicit here would call into doubt any other instances which were not amended in the same way.

Amendment No. 277 would be ineffectual. In summary, the amendment means that anyone who asks to be connected to the gas main could be asked by the transportation company for an indemnity in case the transporter lays the connecting pipe badly and it leaks, leading to an explosion which destroys the building next door. It is obvious that such a requirement would not be reasonable; indeed, nobody could reasonably demand an indemnity in respect of work he carries out himself. The amendment makes no substantive change to the clause.

In order to explain why that is the case, I have to explain the existing provision in Clause 79. At present there are two ways for someone to get his premises connected to a gas main. The first is to request a gas transporter to lay appropriate pipes and make the connection, which transporters are required to do by subsection (2)(a) of section 10 of the Gas Act, if the premises are within 23 metres of an existing main.

The second is for the owner of the premises to arrange to have pipes laid and then require the transporter simply to connect these new pipes to the main. These pipes are known as "self-lay" pipes, and the transporter's duty to connect them is covered by subsection (2)(b). Currently, once these pipes are connected to the gas main, all rights in them vest in the transporter. In the past, certain self-lay operators have not properly reinstated the ground they have dug up in order to lay the pipe. Some transporters have refused to repair or maintain the reinstatement, as they say that only the rights in the pipe are vested in them, and not the liabilities.

We felt that local authorities and similar bodies should not be in any doubt as to which company to chase up in circumstances where the pipe has been laid badly. Licensed gas transporters have to have systems in place for dealing with repairs to their pipes, and so it is simpler for local authorities to go straight to the transporter and not to be bounced between various people. So subsections (4) and (5) of Clause 79 have the effect that liabilities as well as rights vest in the transporter on connection of self-lay pipes.

However, it is very unfair to transporters, simply to load them up with all sorts of liabilities which are beyond their control; so subsection (2) of Clause 79 inserts a new subsection (3A) into Section 10 of the Gas Act, allowing transporters to insist that self-lay operators sign a contract containing reasonable indemnities in respect of any faults connected with the laying of the pipe.

So now local authorities will know who to approach--namely, the transporter--and the transporter will be protected by contracts; and if the self-lay operator refuses to accept reasonable terms, the transporter can simply refuse to connect the new pipes to the mains. The gas and electricity markets authority will determine any disputes as to what is reasonable.

I turn to Amendment No. 280. We want local authorities not to have to chase between different people. It is therefore our policy that the transporter takes on the liabilities with reasonable indemnities. The situation should be no different when a self-lay operator fails to obtain, say, a streetworks licence. The local authority should be able to go straight to the transporter, which should have protected itself with appropriate due diligence and contractual indemnities.

A failure by a self-lay operator to obtain or comply with permissions not required by transporters would have no impact on the transporter in respect of any criminal liability, which would remain with the self-layer. Any civil liabilities would be covered by indemnities. Since transporters could maintain and operate the pipes under their statutory powers, no streetworks licence would be necessary for them and they would not acquire a duty to pay ongoing fees for such a licence.

The amendment is too detailed. It relates to an issue which arises rarely, if at all, and for which a perfectly sensible solution already exists in the ability of transporters to impose reasonable terms indemnifying themselves.

Baroness Buscombe (Conservative)

I thank the Minister for his response to the amendments. Obviously, I am disappointed. However, I shall read carefully in Hansard what he has said. On that basis, I beg leave to withdraw the amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 281:

After Clause 102, insert the following new clause--

:TITLE3:GENERAL RESTRICTIONS ON DISCLOSURE OF INFORMATION

(".--(1) Information which--

(a) has been obtained under or by virtue of the provisions of this Act, Part I of the 1986 Act or Part I of the 1989 Act; and

(b) relates to the affairs of any individual or to any particular business,

shall not be disclosed during the lifetime of the individual or so long as the business continues to be carried on, except as provided below.

(2) Subsection (1) does not apply to a disclosure made with the consent of the individual or the person for the time being carrying on the business.

(3) Subsection (1) does not apply to a disclosure if--

(a) it is made for the purpose of facilitating the performance of any functions of the Secretary of State, the Authority, the Council or the Competition Commission under the 1986 Act, the 1989 Act or this Act;

(b) it is required by a notice under section 38(1A) of the 1986 Act or section 28(2A) of the 1989 Act;

(c) it is made by a licence holder and is required to be made by a condition of his licence; or

(d) it is made by one licence holder to another and is required by that other licence holder for purposes connected with the carrying on of relevant activities.

(4) Subsection (1) does not apply to any disclosure of information made--

(a) for the purpose of facilitating the performance by a person or body mentioned in subsection (5) of any function under an Act or instrument specified in subsection (6);

(b) for the purpose of facilitating the performance by the Comptroller and Auditor General, the Health and Safety Commission or the Health and Safety Executive of any of his or its functions;

(c) for the purpose of facilitating the exercise by the Secretary of State of any power conferred by the Financial Services Act 1986 or by the enactments relating to companies, insurance companies or insolvency;

(d) for the purpose of facilitating the performance of the functions of an inspector appointed under the enactments relating to companies;

(e) for the purpose of facilitating the performance by an official receiver of his functions under the enactments relating to insolvency or by a recognised professional body for the purposes of section 391 of the Insolvency Act 1986 of its functions as such a body;

(f) in connection with the investigation of any criminal offence or for the purposes of any criminal proceedings;

(g) for the purposes of any civil proceedings brought under or by virtue of the 1986 Act, the 1989 Act, this Act or any Act or instrument specified in subsection (6) below; or

(h) in pursuance of a Community obligation.

(5) The persons and bodies specified for the purposes of subsection (4)(a) are--

(a) a Minister of the Crown;

(b) the Competition Commission;

(c) the Director General of Fair Trading;

(d) the Director General of Telecommunications;

(e) the Director General of Water Services;

(f) the Director General of Electricity Supply for Northern Ireland;

(g) the Director General of Gas for Northern Ireland;

(h) the Rail Regulator;

(i) the Civil Aviation Authority;

(j) the Insolvency Practitioners Tribunal;

(k) the Coal Authority; and

(l) a local weights and measures authority in Great Britain.

(6) The Acts and instruments specified for the purposes of subsection (4)(a) and (g) are--

(a) the Trade Descriptions Act 1968;

(b) the Fair Trading Act 1973;

(c) the Consumer Credit Act 1974;

(d) the Estate Agents Act 1979;

(e) the Competition Act 1980;

(f) the National Audit Act 1983;

(g) the Telecommunications Act 1984;

(h) the Airports Act 1986;

(i) the Insolvency Act 1986;

(j) the Consumer Protection Act 1987;

(k) the Control of Misleading Advertisements Regulations 1988;

(l) the Water Act 1989, the Water Industry Act 1991 or any of the other consolidation Acts (within the meaning of section 206 of the Water Industry Act 1991);

(m) the Electricity (Northern Ireland) Order 1992

(n) the Railways Act 1993;

(o) the Coal Industry Act 1994;

(p) the Gas (Northern Ireland) Order 1996;

(q) the Competition Act 1998.

(7) The Secretary of State may by order modify subsection (3), (4), (5) or (6).

(8) Nothing in subsection (1) above is to be construed either as limiting the matters which may be--

(a) published under section 33DA or 35 of the 1986 Act or section 42AA or 48 of the 1989 Act;

(b) made public by the Authority as part of a notice under section 26; or

(c) included in, or made public as part of, a report of the Authority, the Council or the Competition Commission under any provision of this Act, Part I of the 1986 Act or Part I of the 1989 Act;

or as applying to information which has been so published or has been made public as part of such a notice or such a report.

(9) A person who discloses any information in contravention of this section is guilty of an offence and liable--

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

(10) In this section--

"licence holder" means the holder of a gas licence or an electricity licence; and

"relevant activities", in relation to a licence holder means activities he is authorised by his licence to carry on (including, in the case of a gas transporter, the activities mentioned in section 7(1)(b) and (c) of the 1986 Act).

(11) Information obtained by the Authority in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 55 and 56 of that Act (disclosure) and not to subsections (1) to (10) of this section.

(12) The power to make an order under subsection (7) is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

On Question, amendment agreed to.

Clause 3 [Transfer to Authority and Council of functions, property etc.]:

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 282 and 283:

Page 2, line 3, leave out from ("Directors")") to ("are") in line 4.

Page 2, line 23, at end insert--

("( ) Subsection (6) has effect in relation to property, rights or liabilities to which it applies in spite of any provision (of whatever nature) which would prevent or restrict the transfer of the property, rights or liabilities otherwise than by that subsection.").

On Question, amendments agreed to.

Clause 3, as amended, agreed to.

Schedule 3 [Further provision about transfers of functions, property etc.]:

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments No. 284 to 286:

Page 114, line 44, leave out ("or the Council").

Page 115, line 35, leave out ("instruments, contracts and legal proceedings") and insert ("any document").

Page 115, line 45, leave out ("IX") and insert ("XI").

On Question, amendments agreed to.

Schedule 3, as amended, agreed to.

Clause 103 [Interpretation]:

[Amendment No. 287 not moved.]

Clause 103 agreed to.

Clauses 104 and 105 agreed to.

Schedule 6 [Minor and consequential amendments]:

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 288 to 312:

Page 120, line 32, at end insert ("and for "public gas transporters" in each place where it appears, there is substituted "gas transporters"").

Page 121, leave out line 1.

Page 121, line 9, after ("In") insert ("section 19(6)(a), paragraph 5(2) of Schedule 2B and").

Page 121, line 27, at end insert--

(" . In section 24(8) (interpretation of sections 24 to 26 of the 1986 Act) for "and 26 below" there is substituted ", 26 and 26A".").

Page 121, line 27, at end insert--

(". In section 27A(1) (determination of certain disputes) for "domestic customer" there is inserted "customer of a person authorised by a licence or exemption to supply gas".").

Page 121, line 38, leave out ("24 of the Utilities Act 2000".") and insert ("(Sections 24 to 26: supplementary)(4)(b) of the Utilities Act 2000 (order to comply with a direction under section 24 of that Act)".").

Page 121, line 44, at end insert ("as in the Authority's opinion ought to be achieved in individual cases").

Page 122, leave out lines 9 and 10 and insert--

("15. In section 38 (power to require information etc.)--

(a) in subsection (1A) for "4 or 4A above" there is substituted "4AA, 4AB or 4A"; and

(b) in subsection (3) after "document" insert "or record".").

Page 122, leave out lines 11 and 12.

Page 122, line 12, at end insert--

(" . In section 46(3), for "his authorised area" there is substituted "any authorised area of his.").

Page 122, line 25, after ("inserted") insert (""23,").

Page 122, line 32, at end insert--

(" . In Schedule 2B (the gas code), in paragraph 8--

(a) sub-paragraphs (4), (5) and (6) shall be omitted;

(b) in sub-paragraph (8) the words from "but this" to the end shall cease to have effect;

(c) in sub-paragraph (11)--

(i) for the words from "a revision" to "such an election" there is substituted "or a revision of such a scheme"; and

(ii) in paragraphs (a) and (b), for ", revision, election or withdrawal" there is substituted "or revision".").

Page 122, leave out lines 38 to 40 and insert--

("23.--(1) Section 23 (determination of disputes) is amended as follows.

(2) For subsections (1) to (2) there is substituted--

"(1) This section applies (in addition to any disputes to which it applies by virtue of any other provision of this Act) to any dispute arising under sections 16 to 21 between an electricity distributor and a person requiring a connection.

(1A) A dispute to which this section applies--

(a) may be referred to the Authority by either party, or with the agreement of either party, by the Council; and

(b) on such a reference, shall be determined by order made either by the Authority or, if the Authority thinks fit, by an arbitrator (or in Scotland an arbiter) appointed by the Authority.

(1B) The practice and procedure to be followed in connection with any such determination shall be such as the Authority may consider appropriate.

(1C) No dispute arising under sections 16 to 21 which relates to the making of a connection between any premises and a distribution system may be referred to the Authority after the end of the period of 12 months beginning with the time when the connection is made.

(2) Where a dispute arising under sections 16 to 21 between an electricity distributor and a person requiring a connection falls to be determined under this section, the Authority may give directions as to the circumstances in which, and the terms on which, the distributor is to make or (as the case may be) to maintain a connection pending the determination of the dispute."

(3) After subsection (4) there is inserted--

"(4A) A person making an order under this section shall include in the order his reasons for reaching his decision with respect to the dispute.").

(4) After subsection (6) there is inserted--

"(7) Section 16(4)(a) does not apply to the references in this section to making a connection."").

Page 123, line 2, leave out ("24 of the Utilities Act 2000".") and insert ("(Sections 24 to 26: supplementary)(4)(b) of the Utilities Act 2000 (order to comply with a direction under section 24 of that Act)".").

Page 123, line 3, at end insert--

(" .--(1) Section 28 (power to require information etc.) is amended as follows.

(2) After subsection (2) there is inserted--

"(2A) Where a licence has been or is to be revoked or suspended, or has expired or is about to expire by effluxion of time, and it appears to the Authority, having regard to the duties imposed by section 3A, 3B or 3C, to be requisite or expedient to do so for any purpose connected with the revocation, suspension or expiry, the Authority may, with the consent of the Secretary of State, by notice in writing--

(a) require the licence holder to produce, at a time and place specified in the notice, to the Authority, or to any person so specified, any records which are specified or described in the notice and are in the licence holder's custody or under his control; or

(b) require the licence holder to furnish to the Authority, or to any person specified in the notice, such information as may be specified or described in the notice, and specify the time, the manner and the form in which any such information is to be furnished.".

(3) In subsection (3), after "documents" there is inserted "or records".

(4) In subsection (4), after "subsection (2)" there is inserted "or (2A)".

(5) In subsection (5)--

(a) after "document" there is inserted "or record";

(b) after "subsection (2)" there is inserted "or (2A)".

(6) In subsection (6), after "subsection (2)" there is inserted "or (2A)".").

Page 123, line 8, leave out ("paragraphs (a) and (c)") and insert ("paragraph (a)").

Page 123, line 10, after ("transmission";") insert--

("( ) in paragraph (c) for "supply" there is substituted "distribute";").

Page 123, line 33, at end insert ("as in the Authority's opinion ought to be achieved in individual cases."").

Page 123, line 38, at end insert--

("( ) in subsection (2)(a) and (c) for "public electricity suppliers" there is substituted "electricity suppliers";

( ) in subsections (3) and (4) for "a public electricity supplier" there is substituted "an electricity supplier".").

Page 123, line 44, at end insert--

("( ) in subsection (2) for "public electricity suppliers" there is substituted "electricity suppliers";

( ) in subsection (3) for "public electricity supplier" there is substituted "electricity supplier".").

Page 123, line 44, at end insert--

(" . In section 42 (information with respect to levels of performance)--

(a) in subsection (1) for "public electricity suppliers" there is substituted "electricity suppliers";

(b) in subsection (2) for "public electricity supplier" there is substituted "electricity supplier";

(c) in subsection (3) for "a public electricity supplier" there is substituted "an electricity supplier".").

Page 123, leave out lines 47 and 48.

Page 124, leave out line 2.

Page 124, line 9, at end insert--

("( ) In the definition of "electrical plant" after "transmission" there is inserted "distribution".").

Page 124, line 22, at end insert--

("( ) The definition of "private electricity supplier", the definition of "public electricity supplier" and the definition of "tariff customer" shall be omitted.").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

These amendments were spoken to earlier. With the leave of the Committee, I shall move them en bloc. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendment No. 313:

Page 126, line 3, leave out Part I and insert--

:TITLE3:("PART I

:TITLE3:SEPARATION OF ELECTRICITY SUPPLY AND DISTRIBUTION

:TITLE3:Application and purpose of Part I

1.--(1) This paragraph applies to any holder of an existing supply licence under section 6(1)(c) or (2) of the 1989 Act whose activities, immediately before the passing of this Act, include both--

(a) the supply of electricity to premises; and

(b) the distribution of electricity for the purpose of giving a supply to premises or enabling a supply to be so given.

(2) This Part of this Schedule has effect for the purpose of enabling the existing supply licence held by such a licence holder to have effect on and after the day on which section 6(2) of the 1989 Act (as substituted by section 29 above) comes into force as if it were a distribution licence under section 6(1)(c) and a supply licence under section 6(1)(d), each granted to different persons.

(3) Those persons must be--

(a) the licence holder and one of his associates nominated for the purpose of holding whichever of the licences mentioned in sub-paragraph (2) is not to be retained by the licence holder; or

(b) any two associates of the licence holder nominated by him for the purpose of holding those licences.

(4) If immediately before the passing of this Act a person to whom this paragraph applies holds two or more existing supply licences, sub-paragraph (2) applies in relation to such one or more of those licences as the licence holder may, with the approval of the Secretary of State, nominate.

(5) If immediately before the passing of this Act a person to whom this paragraph applies--

(a) generates electricity in pursuance of an existing generation licence; and

(b) transmits electricity in pursuance of an existing transmission licence,

the provisions of this Part of this Schedule also have effect, if that person makes either or both of the nominations mentioned in sub-paragraph (6), for either or both of the purposes mentioned in sub-paragraph (6)(a) and (6)(b).

(6) Those purposes are securing that on and after the day on which section 6(2) of the 1989 Act (as substituted by section 29 above) comes into force--

(a) the licence holder's existing generation licence has effect as if it were a generation licence granted to an associate of his nominated by him for the purpose; and

(b) the licence holder's existing transmission licence has effect as if it were a transmission licence granted to an associate of his nominated by him for the purpose.

(7) An associate nominated for the purposes of sub-paragraph (6)(a) may not be nominated for the purposes of sub-paragraph (3)(a), (3)(b) or (6)(b).

:TITLE3:Nominations and transfer schemes

2.--(1) Before such date as the Secretary of State may direct, a person to whom paragraph 1 applies may (subject to paragraph 3)--

(a) make a nomination for the purposes of paragraph (a) of paragraph 1(3) and make a scheme for the division of all his property, rights and liabilities between himself and the associate nominated under that paragraph; or

(b) make two nominations for the purposes of paragraph (b) of paragraph 1(3) and make a scheme for the division of all his property, rights and liabilities between himself and the associates so nominated;

and in this Part of this Schedule the person who makes such a scheme is referred to as "the supplier".

(2) A scheme under sub-paragraph (1) (referred to in this Part of this Schedule as "a transfer scheme") may--

(a) define the property, rights and liabilities to be allocated to a nominated associate--

(i) by specifying or describing the property, rights and liabilities in question;

(ii) by referring to all (or all but as much as may be excepted) of the property, rights and liabilities comprised in a specified part of the supplier's undertaking; or

(iii) partly in the one way and partly in the other;

(b) provide that any rights or liabilities specified or described in the scheme shall be enforceable either by or against any one or more of the persons between whom the supplier's property, rights and liabilities are being divided;

(c) impose on any of those persons an obligation to enter into such written agreements with, or execute such other instruments in favour of the other such person or, where sub-paragraph (1)(b) applies, either or both of the other such persons as may be specified in the scheme; and

(d) make such supplemental, incidental and consequential provision as the supplier considers appropriate.

(3) Without prejudice to the generality of sub-paragraph (2)(d), a transfer scheme may, in relation to transfers or transactions effected in pursuance of the scheme, make provision, either generally or for specified purposes--

(a) for the transfers or transactions to be regarded as taking place in a specified order; and

(b) for the nominated associate or, where sub-paragraph (1)(b) applies, either or both of the nominated associates to be treated as the same person in law as the supplier.

(4) An obligation imposed by a provision included in a transfer scheme by virtue of sub-paragraph (2)(c) shall be enforceable by civil proceedings by the person or persons to whom it is owed for an injunction or for interdict or for any other appropriate relief or remedy.

(5) A transaction of any description which is effected in pursuance of a provision included in a transfer scheme by virtue of sub-paragraph (2)(c)--

(a) shall have effect subject to any statutory requirements for transactions of that description to be registered in any statutory register; but

(b) subject to that, shall be binding on all other persons, notwithstanding that it would, apart from this sub-paragraph, have required the consent or concurrence of any other person.

In this sub-paragraph "statutory requirements" means requirements imposed by or under any Act or any Act of the Scottish Parliament.

(6) Where a lease of any land is granted in pursuance of a provision included in a transfer scheme by virtue of sub-paragraph (2)(c), any right of pre-emption or other like right affecting that land--

(a) shall not become exercisable by reason of the grant of the lease; but

(b) shall have effect as if the lessee were the same person in law as the lessor.

3.--(1) If the supplier is a supplier to whom paragraph 1(5) applies, he may, before such date as the Secretary of State may direct--

(a) make such nomination or nominations as he thinks fit for either or both of the purposes mentioned in paragraph 1(6); and

(b) include the associate or associates so nominated among the persons between whom his property, rights and liabilities may be divided by the transfer scheme.

(2) Paragraph 2 applies to a transfer scheme dividing property, rights and liabilities between persons including persons nominated for the purposes of paragraph 1(6) with the substitution--

(a) in sub-paragraph (2)(c) for the words from "the other such" to "both"; and

(b) in sub-paragraph (3)(b) for the words from "the" (in the first place it appears) to "both",

of the words "any one or more".

4. The Secretary of State may, on the application of a person to whom this paragraph applies, direct that paragraphs 1 and 2 are to apply to his existing supply licence (or such of his existing supply licences as may be nominated under paragraph 1(4)) as if--

(a) in paragraph 1(2) for "a distribution licence" there were substituted "two distribution licences";

(b) in paragraph 1(3) for "one" there were substituted "two" and for "two" there were substituted "three";

(c) in paragraph 2(1)(a) for "a nomination" and "associate" there were substituted respectively "two nominations" and "associates"; and

(d) in paragraph 2(1)(b) for "two" there were substituted "three".

:TITLE3:Secretary of State's powers in relation to transfer schemes

4A.--(1) A transfer scheme shall not take effect unless it is approved by the Secretary of State.

(2) The Secretary of State may if he thinks fit, before approving a transfer scheme, make such modifications of the scheme as he considers appropriate for the purpose of securing that the scheme makes only such provision as he considers to be requisite or expedient for the purposes of this Part of this Schedule.

(3) The powers of the Secretary of State under this paragraph may in particular be exercised with a view to ensuring that a proposed transfer scheme does not operate against the public interest.

(4) It shall be the duty of the supplier to provide the Secretary of State with all such information and other assistance as he may require for the purposes of or in connection with the exercise of any function conferred on him by sub-paragraph (1) and (2).

:TITLE3:Effect of transfer scheme

4B.--(1) Subject to the provisions of paragraph 4E, on the effective date for a transfer scheme, all property, rights and liabilities--

(a) to which immediately before that day the supplier was entitled or subject; and

(b) which are allocated to a nominated associate by the transfer scheme,

shall become by virtue of this paragraph property, rights and liabilities of that associate.

(2) For the purposes of this Part of this Schedule, the "effective date", in relation to a transfer scheme, is the day on which section 6(2) of the 1989 Act (as substituted by section 29 above) comes into force or such earlier day as the Secretary of State may direct for the purposes of the scheme.

:TITLE3:Supplementary provisions as to transfers

4C.--(1) The provisions of Schedule 10 to the 1989 Act (supplementary provisions as to transfers) shall apply to any transfer which is effected by paragraph 4B--

(a) with the modifications made by sub-paragraphs (2) and (3); and

(b) to the extent mentioned in those provisions as modified by those sub-paragraphs;

and paragraph 4B shall have effect subject to those provisions as so modified.

(2) For the purpose of its application to a transfer effected by paragraph 4B, Schedule 10 to the 1989 Act shall apply as if--

(a) paragraphs 2(4) and (5), 3 and 6(2) and in paragraphs 4(4)(b) and 8(1) and (2) the words "or of a direction under paragraph 2(4) above" were omitted;

(b) any reference to transfers effected in pursuance of a transfer scheme were references to transfers effected by paragraph 4B;

(c) any reference to the transferor were a reference to the supplier;

(d) any reference to a transfer of all property, rights and liabilities comprised in a specified part of the transferor's undertaking were a reference to a transfer of all (or all but as much as may be excepted) of the property, rights and liabilities comprised in a specified part of the supplier's undertaking;

(e) any reference to a transferee of a specified part or any other part of the transferor's undertaking were a reference to a transferee of a specified part or any other part of the supplier's undertaking; and

(f) any reference to the transfer date were a reference to the effective date for the transfer scheme.

(3) For the purposes of sub-paragraph (2)(a),(b), (d) and (e), any property, rights or liabilities retained by the supplier in pursuance of the transfer scheme shall be deemed to be transferred to the supplier by paragraph 4B in pursuance of the scheme.

:TITLE3:Shares issued in pursuance of a transfer scheme

4D. Any shares issued to the supplier or to an associate of his by a transferee in pursuance of the transfer scheme--

(a) shall be of such nominal value as may be specified in or determined under the scheme;

(b) shall be issued or allotted on such terms as may be so specified or determined; and

(c) shall be issued as fully paid and treated for the purposes of the Companies Act 1985 as if they had been paid up by virtue of the payment to the transferee in cash of their nominal value and, if the scheme so provides, such premium as may be so specified or determined.

:TITLE3:Statutory accounts

4E.--(1) This paragraph has effect for the purposes of any statutory accounts of a transferee, that is to say, any accounts prepared by the transferee for the purpose of any provision of the Companies Act 1985 (including group accounts).

(2) Subject to sub-paragraph (3), the value or amount to be assigned to any asset or liability which is vested in the transferee by virtue of paragraph 4B shall be--

(a) the value or amount (if any) assigned to the asset or liability for the purposes of the corresponding statement of accounts prepared by the supplier in respect of the last complete accounting year of the supplier to end before the commencement day; or

(b) if the asset or liability is part only of an asset or liability to which a value or amount is so assigned, so much of that value or amount as may be determined by or under the transfer scheme; or

(c) if no value or amount is given by paragraph (a) or (b) or the value or amount so given is inappropriate in all the circumstances of the case, such value or amount as may be determined, on the basis of the supplier's accounting records, by or under the transfer scheme.

(3) The amount to be included in respect of any item shall be determined as if so much of anything done by the supplier (whether by way of acquiring, revaluing or disposing of any asset or incurring, revaluing or discharging any liability, or by carrying any amount to any provision or reserve, or otherwise) as may be determined by or under the transfer scheme had been done by the transferee.

(4) Without prejudice to the generality of the preceding provisions of this paragraph, the amount to be included from time to time in any reserves of the transferee as representing the transferee's accumulated realised profits shall be determined as if such proportion of any profits realised and retained by the supplier as is determined by or under the transfer scheme had been realised and retained by the transferee.

(5) In this paragraph, in relation to the supplier--

"accounting records" means accounting records kept by the supplier in pursuance of section 221 of the Companies Act 1985;

"complete accounting year" means a financial year of the supplier determined in accordance with section 223 of that Act.

:TITLE3:Consequential modifications of rating provisions

4F.--(1) This paragraph applies where any transfer effected by paragraph 6 is a transfer of a hereditament which, immediately before the commencement day is a hereditament which falls within--

(a) the description set out in Part 2 of the Schedule to the Central Rating List (England) Regulations 2000; or

(b) the description set out in Part 2 of the Schedule to the Central Rating List (Wales) Regulations 1999.

(2) The Secretary of State may by order make such modifications of that Part of that Schedule, and of the Electricity Supply Industry (Rateable Values)(England) Order 2000 or the Electricity Supply Industry (Rateable Values)(Wales) Order 2000, as may appear to him necessary or expedient as a consequence of the transfer.

(3) An order under this paragraph which is made after the commencement day may have effect as from that day or any later day.

(4) Where, by virtue of sub-paragraph (3), an order under this paragraph has effect from a day earlier than that on which it is made, any necessary alteration shall be made with effect from that earlier day to any central rating list in which the hereditament is shown.

(5) An order under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

:TITLE3:Interpretation

4G. In this Part of this Schedule--

"effective date" has the meaning given by paragraph 4B(2);

"existing" in relation to an electricity licence, means in force immediately before the passing of this Act;

"the supplier" means the person who makes a transfer scheme;

"transferee" means the transferee under a transfer effected by paragraph 4B;

"transfer scheme" means a scheme under paragraph 2.

4H.--(1) For the purposes of this Part of this Schedule a company is an associate of the supplier if--

(a) the company is a wholly owned subsidiary of the supplier;

(b) the supplier is a wholly owned subsidiary of the company; or

(c) the company and the supplier are both wholly owned subsidiaries of another company;

and the company is registered under the Companies Act 1985 as a company limited by shares.

(2) The references in sub-paragraph (2) to a wholly owned subsidiary shall be construed in accordance with section 736 of the Companies Act 1985.").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

In rising to move Amendment No. 313, I shall speak also to Amendments Nos. 314 to 316 and 352. This is a short group with long amendments. They introduce transitional provisions.

Amendment No. 313 is a technical amendment which deals with the practicalities of separating electricity supply and distribution businesses. Its aim is to facilitate the legal separation of supply and distribution businesses required by the Bill. It gives those suppliers who will also be carrying out distribution activities an option to make transfer schemes to allocate property, rights and liabilities between new companies. There is no duty to use a scheme, which we think would be inappropriate given the diverse nature of the market and the different levels of operational separation which have already been achieved.

Transfer schemes will be subject to the Secretary of State's approval. Our overall objective has been to introduce flexibility to take account of the more complex ownership and structure of the electricity sector now. We also wished to ensure that schemes recognised the interests of third parties.

Through consultation with industry, we have sought in this amendment to provide for various possibilities for companies to restructure their businesses compatible with the regulator's requirements on business separation.

Amendment No. 314 provides for the Secretary of State to make licensing schemes in respect of electricity and gas licences. These schemes are needed in order to ensure continuity of existing licences when the licensing provisions of the Bill come into force.

Amendment No. 315 provides that, at the point where Section 18 of the Electricity Act is repealed by Clause 44 of the Bill, customers who are taking a tariff supply under that section from a public electricity supplier can be deemed to be subject to a contract with the supplier who is a successor to the public electricity supplier in question. Amendment No. 316 contains transitional provisions that define the "first financial year" of the authority and the new council; set out the periods to be covered by the initial forward work programmes of the two bodies; and set out the arrangements for producing the final annual reports of the outgoing directors general and Gas Consumers' Council.

Amendment No. 352 makes provision that a commencement order made by the Secretary of State may contain transitional provisions and savings relating to the provisions being brought into force by the order. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 314 to 317:

Page 127, line 41, at end insert--

:TITLE3:("PART II

:TITLE3:SECRETARY OF STATE'S LICENSING SCHEMES

:TITLE3:Existing electricity supply licences

4I.--(1) This paragraph applies to any holder of an existing supply licence under section 6(1)(c) or (2) ("the supplier") who has made a transfer scheme under paragraph 2 which has been approved by the Secretary of State.

(2) As soon as practicable after the date specified in the Secretary of State's direction under paragraph 2(1) and in any event before the day on which section 6(2) of the 1989 Act (as substituted by section 29) comes into force, the Secretary of State shall make a scheme providing--

(a) for the supplier's existing supply licence to have effect as mentioned in paragraph 1(2); and

(b) if the supplier has nominated an associate or associates for either or both of the purposes of paragraph 1(6), for either or both of his existing generation and transmission licences to have effect as mentioned in paragraph 1(5).

(3) In making a scheme under this paragraph, the Secretary of State shall have regard to the provisions of the supplier's transfer scheme.

(4) In this paragraph "existing", in relation to a licence, means in force immediately before the passing of this Act.

4J.--(1) The Secretary of State shall as soon as practicable after the passing of this Act make a scheme providing for existing licences under section 6(1)(c) which--

(a) are held by a person whose activities include both of those mentioned in paragraph 1(1); and

(b) are not the subject of a scheme under paragraph 4I,

to have effect on and after such date as the scheme may specify as if it were--

(a) a distribution licence and a supply licence, each granted to the holder of the existing licence;

(b) a distribution licence; or

(c) a supply licence.

(2) In this paragraph "existing", in relation to a licence, means in force immediately before the date mentioned in sub-paragraph (1).

4K.--(1) The Secretary of State shall as soon as practicable after the passing of this Act make a scheme, in relation to existing licences under section 6(1)(c) other than licences which--

(a) are the subject of a scheme under paragraph 4I; or

(b) fall within paragraph 4J(1),

providing for each such licence to have effect on and after such date as the scheme may specify as if it were a supply licence under section 6(1)(d).

(2) In this paragraph "existing", in relation to a licence, means in force immediately before the date mentioned in sub-paragraph (1).

4L.--(1) The Secretary of State shall as soon as practicable after the passing of this Act make a scheme, in relation to existing licences under section 6(2), providing for each such licence to have effect on and after such date as the scheme may specify as if it were--

(a) a supply licence under section 6(1)(d); or

(b) an exemption from section 4(1)(c) of the 1989 Act granted under section 5 of that Act (exemptions from prohibition).

(2) In this paragraph "existing", in relation to a licence, means in force immediately before the date mentioned in sub-paragraph (1).

4M.--(1) Subject to sub-paragraph (2), a scheme under paragraph 4I, 4J, 4K or 4L shall secure that each condition which by virtue of section 32(1) is a standard condition for the purposes of licences of the appropriate type is incorporated in any licence to be treated by virtue of the scheme as a supply licence or a distribution licence and, where the scheme makes the provision mentioned in paragraph 4I(2)(b), in any licence to be treated as a generation licence or as a transmission licence.

(2) Such a scheme may provide that each licence, and in the case of a scheme under paragraph 4L each exemption, which is to be treated as granted by virtue of the scheme (including both the terms and conditions of the licence or exemption which are derived from the existing licence and, in the case of a licence, the standard conditions which would otherwise be incorporated by virtue of sub-paragraph (1)) shall have effect with--

(a) such incidental, consequential and supplementary amendments as appear to the Secretary of State to be necessary or expedient; and

(b) such other amendments (if any) as may be agreed between the Secretary of State and the holder of the existing licence from which the licence or exemption is derived.

(3) Such a scheme may--

(a) make such transitional provision as appears to the Secretary of State to be necessary or expedient; and

(b) make different provision for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme.

(4) As soon as practicable after making such a scheme the Secretary of State shall publish, as respects each different case or class of case--

(a) the text of each licence which is to be treated as a licence granted by virtue of the scheme; and

(b) in the case of a scheme under paragraph 4L, the text of any exemption which is to be treated as granted by virtue of the scheme.

(5) Any text so published shall be treated as authoritative unless the contrary is shown.

:TITLE3:Existing generation and transmission licences

4N.--(1) The Secretary of State may, before the day on which section 29 comes into force, make one or more schemes for securing (subject to sub-paragraph (2)) that, on and after that day, the standard conditions which by virtue of section 32(1) are standard conditions for the purposes of licences of the appropriate type are incorporated in each generation licence and each transmission licence which is in force immediately before that day.

(2) A scheme under this paragraph may provide that the terms and conditions of any existing licence to which it relates (including the standard conditions which would otherwise be incorporated by virtue of sub-paragraph (1)) shall have effect with--

(a) such incidental, consequential and supplementary amendments as appear to the Secretary of State to be necessary or expedient; and

(b) such other amendments (if any) as may be agreed between the Secretary of State and the holder of the licence.

(3) A scheme under this paragraph may--

(a) make such transitional provision as appears to the Secretary of State to be necessary or expedient; and

(b) make different provision for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme.

(4) As soon as practicable after making such a scheme the Secretary of State shall publish, as respects each different case or class of case, the text on the commencement of section 29 of each licence to which the scheme relates as it has effect by virtue of the scheme.

(5) Any text so published shall be treated as authoritative unless the contrary is shown.

:TITLE3:Existing gas licences

4O.--(1) The Secretary of State may, before the day on which section 80(2) comes into force, make one or more schemes for securing (subject to sub-paragraph (2)) that on and after that day the standard conditions which by virtue of section 80(2) are standard conditions for the purposes of gas licences of any type are incorporated in each gas licence of that type which is in force immediately before that day.

(2) A scheme under this paragraph may provide that the terms and conditions of any existing licence to which it relates (including both the terms and conditions of that licence and the standard conditions which would otherwise be incorporated by virtue of sub-paragraph (1)) shall have effect with--

(a) such incidental, consequential and supplementary amendments as appear to the Secretary of State to be necessary or expedient; and

(b) such other amendments (if any) as may be agreed between the Secretary of State and the holder of the licence.

(3) Such a scheme may--

(a) make such transitional provision as appears to the Secretary of State to be necessary or expedient; and

(b) make different provisions for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme.

(4) As soon as practicable after making a scheme under this paragraph, the Secretary of State shall publish, as respects each different case or class of case, the text on the commencement of section 80(2) of each gas licence to which the scheme relates.

(5) Any text so published shall be treated as authoritative unless the contrary is shown.

:TITLE3:Effect of licensing schemes

4P.--(1) On the day on which a scheme under this Part of this Schedule comes into operation, the licences to which it relates shall have effect as provided for by the scheme.

(2) The modification under paragraph 4M(2), 4N(2) or 4O(2) of part of what would otherwise be a standard condition of--

(a) a licence to be treated as granted by virtue of a scheme under paragraph 4I, 4J or 4K; or

(b) a licence to which a scheme under paragraph 4L, 4N or 4O relates,

shall not prevent any other part of the condition which is not so modified being regarded as a standard condition for the purposes of Part I of the 1989 Act or Part I of the 1986 Act, as the case may be.

:TITLE3:Provision of information by licence holders

4Q.--(1) It shall be the duty of each holder of a licence under the 1986 Act to provide the Secretary of State with all such information and other assistance as he may require for the purposes of or in connection with the exercise of any function conferred on him by paragraph 4O in relation to such licences.

(2) It shall be the duty of each holder of a licence under the 1989 Act to provide the Secretary of State with all such information and other assistance as he may require for the purposes of or in connection with the exercise of any function conferred on him by this Part of this Schedule in relation to such licences.

:TITLE3:Consultation by Secretary of State

4R. The Secretary of State shall not exercise any function conferred on him by this Part of this Schedule except after consultation with--

(a) the Authority; and

(b) such holders of licences under the 1986 Act or such holders of licences under the 1989 Act as he considers appropriate.").

Page 127, line 41, at end insert--

:TITLE3:("PART III

:TITLE3:ELECTRICITY LICENSING

:TITLE3:Former tariff customers

4S.--(1) This paragraph applies where immediately before the commencement date a public electricity supplier ("the supplier") is supplying tariff customers with electricity.

(2) The supplier's supply successor shall be deemed to have contracted with those customers for the supply of electricity as from that day.

(3) The express terms and conditions of a contract which, by virtue of sub-paragraph (2), is deemed to have been made by the supplier shall be provided for by the scheme under this paragraph which relates to that supplier.

(4) Before such date as the Secretary of State may direct, the supplier shall make a scheme for determining the terms and conditions which are to be incorporated in the contracts which, by virtue of sub-paragraph (2), are to be deemed to have been made by the supplier.

(5) A scheme under this paragraph may (subject to section 7B of the 1989 Act)--

(a) make different provisions for different cases or classes of cases, or for different areas, determined by, or in accordance with, the provisions of the scheme; and

(b) make such supplemental, incidental, consequential and transitional provisions as the supplier considers appropriate.

(6) A scheme under this paragraph shall not take effect unless it is approved by the Authority; and the Authority may modify such a scheme before approving it.

(7) If, in relation to such a scheme--

(a) the supplier fails, before the date specified under sub-paragraph (4), to submit the scheme for the approval of the Authority; or

(b) the Authority decides not to approve the scheme that has been submitted by the supplier (either with or without modifications),

the Authority may itself make the scheme.

(8) It shall be the duty of the supplier to provide the Authority with all such information and other assistance as it may require for the purposes of or in connection with the exercise of any function conferred by sub-paragraph (6) or (7).

(9) The Authority shall not exercise any function conferred by sub-paragraph (6) or (7) except after consultation with the supplier.

(10) A scheme made under this paragraph shall be published in the London and Edinburgh Gazettes before the commencement date and shall come into operation on that date; and conclusive evidence of a scheme so made may be given in all courts of justice and in all legal proceedings whatever by the production of a copy of either of those Gazettes purporting to contain it.

(11) In this paragraph--

"commencement date" means the date on which section 44 comes into force; and

"supply successor", in relation to a public electricity supplier, means the person who becomes an electricity supplier by virtue of a scheme made by or in relation to that public electricity supplier under Part II of this Schedule.").

Page 128, line 7, at end insert--

:TITLE3:("First financial years of Authority and Council

.--(1) In this paragraph "the body" means the Authority or the Council.

(2) If the period beginning with the day on which the body is established and ending with the next 31st March is six months or more, the first financial year of the body is that period.

(3) If the period mentioned in sub-paragraph (2) is less than six months, the first financial year of the body is the period beginning with the day on which the body is established and ending with 31st March in the following year.

:TITLE3:First forward work programmes of Authority and Council

. The Authority's first forward work programme required by section 4(1) shall relate to the financial year following its first financial year.

.--(1) The Council's first forward work programme required by section 4(1) shall be published within the period of three months beginning with the day on which the Council is established.

(2) That forward work programme shall relate to the Council's plans for the period beginning with the day on which it is published and ending with the last day of the Council's first financial year (and section 4 shall apply accordingly).

:TITLE3:Last annual reports of the Directors

.--(1) After the abolition of the offices of Director General of Gas Supply and Director General of Electricity Supply, any duty of either Director to make an annual report, in relation to any calendar year for which such a report has not been made, shall be carried out by the Authority.

(2) The period between the abolition of those offices and the end of the preceding calendar year (if less than 12 months) shall be treated as the calendar year for which the last annual reports are required.

(3) If that period is nine months or more, the Authority shall make the last annual reports as soon as practicable after the end of that period.

(4) If that period is less than nine months the last annual reports shall be made no later than the first report of the Authority under section 5(1).

(5) In this paragraph "annual reports" means reports required by section 39(1) of the 1986 Act and section 50(1) of the 1989 Act.

:TITLE3:Last annual report of the Gas Consumers' Council

.--(1) After the abolition of the Gas Consumers' Council, any duty of the Gas Consumers' Council to make an annual report, in relation to any calendar year for which such a report has not been made, shall be carried out by the Council.

(2) The period between the abolition of the Gas Consumers' Council and the end of the preceding calendar year (if less than 12 months) shall be treated as the calendar year for which the last annual report is required.

(3) If that period is nine months or more, the Council shall make the last annual report as soon as practicable after the end of that period.

(4) If that period is less than nine months the last annual report shall be made no later than the first report of the Council under paragraph 6 of Schedule 2.

(5) In this paragraph "annual report" means a report required by section 41 of the 1986 Act.").

Page 128, line 7, at end insert--

:TITLE3:("Investigations being carried out under the 1986 Act

.--(1) This paragraph applies to any matter--

(a) being investigated by the Director General of Gas Supply under section 31 of the 1986 Act (duty to investigate certain matters) immediately before the repeal by this Act of that section;

(b) being investigated by the Gas Consumers' Council under section 32 of the 1986 Act immediately before the commencement of section 22(1) above;

(c) being investigated by that Council under section 32A of the 1986 Act immediately before the repeal by this Act of that section;

(d) being investigated by that Council under section 33 of the 1986 Act (power to investigate certain matters) immediately before the commencement of section 23(1) above.

(2) If the matter being investigated is a matter which appears to the Council to be a matter which is or amounts to a complaint to which section 32 of the 1986 Act (as substituted by section 22(1) above) applies, the Council shall treat the matter as if it were a complaint referred to it under that section.

(3) In any other case the Authority shall either--

(a) agree with the Council that the Council is to investigate the matter under section 33 of the 1986 Act (as substituted by section 23(1) above); or

(b) make such further investigations of the matter, and take such action, as it considers appropriate.

(4) Where the Council or the Authority is required by virtue of sub-paragraph (2) or (3) to investigate a matter, it may treat anything done by the Director General of Gas Supply or the Gas Consumers' Council in investigating that matter as if done for the purposes of its own investigation.

(5) The Director General of Gas Supply and the Gas Consumers' Council shall give the Authority and the Council such information or assistance as may be necessary to enable them to of carry out their functions under this paragraph.

:TITLE3:Investigations being carried out under the 1989 Act

.--(1) This paragraph applies to any matter--

(a) being investigated by the Director General of Electricity Supply or a consumers committee under section 45 of the 1989 Act (investigation of enforcement matters) immediately before the repeal by this Act of that section;

(b) being investigated by a consumers' committee under section 46 of the 1989 Act (duty of consumers' committees to investigate certain matters) immediately before the commencement of section 22(2) above.

(2) If the matter being investigated is a matter which appears to the Council to be a matter which is or amounts to a complaint to which section 46 of the 1989 Act (as substituted by section 22(2) above) applies, the Council shall treat the matter as if it were a complaint referred to it under that section.

(3) In any other case the Authority shall either--

(a) agree with the Council that the Council is to investigate the matter under section 46A of the 1989 Act (as inserted by section 23(2) above); or

(b) make such further investigations of the matter, and take such action, as it considers appropriate.

(4) Where the Council or the Authority is required by virtue of sub-paragraph (2) or (3) to investigate a matter, it may treat anything done by the Director General of Electricity Supply or a consumers' committee in investigating that matter as if done for the purposes of its own investigation.

(5) The Director General of Electricity Supply and the consumers' committees shall give the Authority and the Council such information or assistance as may be necessary to enable them to carry out their functions under this paragraph.").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

With the leave of the Committee, I shall move Amendments Nos. 314 to 317 together. I beg to move.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 318 to 349:

Page 128, line 12, column 3, leave out from first ("the") to the end of line 15 and insert--

Page 128, line 23, column 3, at beginning insert--

Page 128, line 24, column 3, after ("the") insert ("Chairman of a consumers' committee appointed under section 2 of the Electricity Act 1989, the Chairman of the Gas Consumers' Council, the").

Page 128, line 28, column 3, at beginning insert--

Page 128, line 29, column 3, after ("the") insert ("Chairman of a consumers' committee appointed under section 2 of the Electricity Act 1989, the").

Page 128, line 37, column 3, at end insert--

Page 129, line 5, column 3, at end insert ("in the licence"").

Page 129, line 5, column 3, at end insert--

Page 129, line 8, column 3, at end insert--

Page 129, line 11, column 3, leave out ("the word "33BB"") and insert ("subsection (5)(aa) and (b), subsection (7A), the word "33BB" in subsection (8) and subsection (9)").

Page 129, line 12, column 3, at end insert--

Page 129, line 13, column 3, leave out ("32") and insert ("31").

Page 129, line 24, column 3, after ("words") insert (""notifications and directions under").

Page 129, line 30, column 3, at end insert--

Page 129, line 30, column 3, at end insert--

Page 129, column 3, leave out lines 31 to 33 and insert--

Page 129, line 33, column 3, at end insert--

Page 129, line 36, column 3, leave out ("Section 48(4).") and insert ("In section 48, subsections (3) and (4).").

Page 129, line 40, column 3, after ("2B,") insert ("paragraph 7(2) and").

Page 129, line 46, column 3, at end insert ("and paragraph 8(4), (5) and (6)").

Page 129, line 46, column 3, at end insert ("and in paragraph 8(8) the words from "but this" to the end").

Page 129, line 46, column 3, at end insert--

Page 129, line 46, column 3, at end insert--

Page 130, line 8, column 3, at end insert--

Page 130, line 13, column 3, at end insert--

Page 130, line 29, column 3, at end insert--

Page 130, line 29, column 3, at end insert--

Page 130, line 32, column 3, at end insert--

Page 130, line 32, column 3, at end insert--

Page 130, line 32, column 3, at end insert--

Page 130, line 42, column 3, at end insert--

Page 130, column 3, leave out lines 46 and 47 and insert ("31, 32, 33, 36, 41, 42(1)(a) and (2)(a), 48, 49 and 50").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

With the leave of the Committee, I beg to move Amendments Nos. 318 to 349 en bloc.

Lord Kingsland (Conservative)

moved Amendment No. 350:

Page 109, line 20, leave out ("Utilities") and insert ("Gas and Electricity").

Lord Kingsland (Conservative)

This Bill originally contained four public utilities--gas, electricity, telecommunications and water. It now contains only two. In my submission, it would be more accurate to describe this Bill in your Lordships' House as the Gas and Electricity Bill. I beg to move.

Baroness Sharp of Guildford (Liberal Democrat)

I rise to say that on these Benches we have some sympathy with this amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

Everyone involved in the industry, consumer groups and other interest groups has become accustomed to the title "Utilities Bill". To change it would serve no purpose and would confuse some of those who have had the patience to pursue our debate. We estimate that to amend the short title consistently throughout the Bill a further 13 amendments would have to be moved in addition to the amendment to Clause 107 itself. We oppose this amendment.

Lord Kingsland (Conservative)

I am naturally disappointed by the Minister's reply. I am very tempted to divide the House but, on mature reflection, I shall ask the Minister to think further about his rather categoric answer.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

No, I shall not think further about my categoric answer.

Lord Kingsland (Conservative)

Nevertheless, I still invite him to do so, because we shall return to this matter at Report stage. Meanwhile, I beg leave to withdraw the amendment.

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

moved Amendments Nos. 351 to 352:

Page 109, line 21, after ("section") insert ("and section 67)").

Page 109, line 23, at end insert--

("(2A) An order under subsection (2) may contain transitional provisions and savings relating to the provisions being brought into force by the order.").

Lord McIntosh of Haringey (Deputy Chief Whip (House of Lords), HM Household; Labour)

With the leave of the Committee, I beg to move Amendments Nos. 351 to 352 en bloc.