Clause 1 - Security and integrity of supply
Energy Bill [Lords]
10:45 am
Mr Stephen Timms (Minister of State (e-Commerce & Competitiveness), Department of Trade and Industry; East Ham, Labour)
My hon. Friend is right on both those points. With regard to gas supply, there is the pipeline from Norway, to which I referred. I also hope that the existing interconnectors between the UK and
continental Europe will be expanded. Moreover, as he rightly says, there are three projects to import LNG into the UK, which I hope will make rapid progress. We will therefore have a diversity of sources for the supply of gas and, for the longer term, discussion is taking place about a pipeline from Russia.
My hon. Friend is also right about the state of other renewable technologies. I caution everyone against taking the view that we support renewable energy except the form of renewable energy that is most cost-effective at present. As he rightly said, if we adopted that position, we would not be doing anything at present. Once those new forms of renewable energy are at a stage at which they can be commercially deployed—thanks to Government funding and support, that should be sooner rather than later—I have no doubt that the concerns now being expressed about wind power will also be raised in respect of those technologies. We will then need to address those concerns. We would be mistaken if we took the view that there are other alternatives a few years down the track and that if we wait for them, we will not have any problems.
Clause 1 would give the Secretary of State a duty to ensure the integrity and security of electricity and gas supply. It was brought forward as an amendment to the Bill by both Conservative and Liberal Democrat peers during consideration on Report in the Lords. I understand that their intention was to strengthen the security of supply obligations in legislation, and to make it clear that responsibility for that matter rests with the Secretary of State. I have no doubt that Members in the other place who introduced the amendment did so with the best of intentions.
It has since become clear, however, that the clause as drafted would have unintended and harmful consequences. In particular, it could require widespread intervention by the Secretary of State in the operations of the market and the decisions of Ofgem. Numerous industry spokespeople have made clear their worry about consequent uncertainty in the market and the danger, in particular, of undermining firms' incentives to invest in secure energy supplies and to commit themselves to investment in a timely manner.
The hon. Member for Lewes asked me to spell out the problem. I hope that he has seen the representations that we have received. The problem, in a nutshell, is that the provision creates a good deal of regulatory uncertainty. It would be an invitation to people who disagreed with decisions that were made to go to the Secretary of State or to apply for judicial review, and to say, ''In our view, this step or decision does not maximally secure energy security and should therefore be challenged.'' There would be a great deal of uncertainty and the consequence, perversely, would be to harm the security of our energy supplies.