Clause 84 - Gas and Electricity Markets Authority sustainability duty
Energy Bill [Lords]
8:55 am
Dr Desmond Turner (Brighton, Kemptown, Labour)
Good morning, Mr. Sayeed. If one has to spend a beautiful summer morning indoors, at least it is a pleasure to do so under your chairmanship. I shall endeavour to keep within the bounds of debate
that you have set, although I am sure that you will appreciate that we have reached a point during consideration of the Bill at which fundamental principles come into play. I shall try to limit my remarks as much as I can, but I trust that you will allow me a little gracious latitude should I stray.
Those of us who listened to my right hon. Friend the Prime Minister recently will have heard him enunciate the importance of climate change and the fact that Britain will make its contribution through renewable energy by achieving its 10 per cent. target by 2010 and so on. The amendment is designed to provide part of the legislative means to turn those objectives into reality. We can have the most marvellous objectives in the world, but if we do not will the means to achieve them we shall not do so. There is little evidence to suggest that we will achieve these aims unless we do something extra, and we are now talking about the something extra.
The regulator is one of the key players, if not the key player, in the scenario. We know from the brief history of the regulator's existence what can go wrong if the regulator does things that are unfavourable to renewable energy. That is why the brief to which the regulator is working is so important. The terms of reference and statutory obligations of the regulator are set down in the Electricity Act. A document issued only last month by the regulator sets out the statutory framework as seen by the regulator. It refers to
''the need to secure that all reasonable demands for electricity are met'',
which relates to security of supply. I can assure people that that factor is uppermost in the regulator's mind. The document also refers to
''the need to secure that licence holders are able to finance their licensable activities''
''the interests of the disabled, chronically sick, those of pensionable age, those with low incomes and those residing in rural areas''
as well as protecting consumers. That is fine.
The document continues:
''Subject to the above, the Authority is also required to carry out its functions in a manner which is best calculated to . . . promote efficiency and economy on the part of persons authorised by licences or exemptions to carry out licensable activities . . . protect the public from dangers arising from licensable activities, and secure a diverse and viable long-term energy supply''.
As an afterthought, it states:
''The Authority is also required to have regard to the effect on the environment of licensable activities and to any social and environmental guidance issued by the Secretary of State.''
It is my contention, which is wholeheartedly backed by those I have spoken to who are involved in any way with the renewables business, that, although the terms of reference may have been appropriate 15 years ago, they no longer are.
The amendment does not disregard the need to maintain security of supply or to retain a fair, competitive market, but sets those needs in the context of achieving environmental objectives through the deployment of renewable energy. Therefore, we would no longer have a situation such as when new electricity trading arrangements were introduced, and renewable generators were greatly disadvantaged because of their
stochastic nature and were liable for penalties. Market conditions that were extremely unfavourable for combined heat and power were set. Since the introduction of NETA, the growth of CHP has stopped dead. That is an example of how important an effect the regulator can have.