Electricity Industry (Privatisation)

Oral Answers to Questions — Energy – in the House of Commons at 12:00 am on 4th July 1988.

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Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth 12:00 am, 4th July 1988

To ask the Secretary of State for Energy when he will next meet the chairman of the Central Electricity Generating Board to discuss the privatisation of the electricity supply industry.

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

I meet the chairman of the CEGB regularly to discuss various matters relating to the privatisation of the electricity supply industry.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

Will the Secretary of State discuss pricing with Lord Marshall, and, when he does, correct the misleading impression that he created in the House when he suggested that Labour Members want electricity to be sold off as cheaply as possible? Will he also discuss with him the steps that will be necessary to prevent South African mining interests from having a substantial interest in, and influence over, the private electricity generating industry?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

There is no evidence that South African mining interests wish to have a major investment in the electricity supply industry. In fact, those reports were pure fiction. We shall certainly announce to the House measures that will ensure that no one person or groups of people acting in concert can obtain a major interest in our electricity supply industry.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedfordshire North

Does my right hon. Friend agree that if the grid is owned by 12 instead of one there is greater opportunity for muddle in the event of a crisis or of surplus capacity having to be determined?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

No, I do not. Although the grid will be owned by 12 individual shareholders, it will be operated by one strong management, which will have day-to-day control of it. In those circumstances, the ownership is irrelevant.

Photo of Matthew Taylor Matthew Taylor Liberal Democrat Spokesperson (Energy)

Will the obligation on the CEGB to use the cheapest possible source of supply be maintained when it is privatised?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

As the hon. Gentleman knows, we have made it clear that we believe that security of supply of electricity is all-important and that that security is best based on diversity. Therefore, we intend to legislate for a non-fossil fuel obligation, which will include nuclear, wave-power and wind. We believe that that is necessary for reasons which I have explained to the House and which one of these days the hon. Gentleman might understand.

Photo of Charles Wardle Charles Wardle , Bexhill and Battle

If privatisation creates two separate generating companies which compete with each other in England and Wales, will that not exert a downward pressure on costs, to the advantage of the consumer?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

I believe that it will, but it is only the beginning. We intend to strengthen the interconnecter with Scotland. We believe that Scotland can be an important supplier of electricty to the English market. We know for a fact that the area boards are already discussing with a variety of would-be generators the provision of additional capacity, so many generators will be operating in the market in the years ahead, and that must be good news for the customer.

Photo of John Prescott John Prescott Shadow Secretary of State, Shadow Secretary of State for Transport

Is the Secretary of State aware that Inspector Barnes' inquiry into Hinkley Point C has made it clear that he is prepared to accept evidence to compare a coal-fired station with a nuclear-powered station, which is contrary to his own terms of reference? Will the Secretary of State make it clear to the chairman of the CEGB that his decision not to co-operate in the provision of such information is because he is of the view that the Government's 20 per cent. non-fossil fuel requirement means that it must be a nuclear power station?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

I am glad to have the opportunity of clearing up this matter. The inspector must take whatever evidence he finds necessary for him to arrive at a recommendation that he will make to me. There is no restriction at all. The guidelines are not a restriction: they are guidelines. If the inspector feels that he needs further information, he must get it, and he has our encouragement in seeking it.

Photo of Mr David Harris Mr David Harris , St Ives

Will my right hon. Friend give the assurance for which I asked him in writing, namely,that the new privatised electricity companies will have parity of charges within their areas, so that, for example, there will be no disadvantage to consumers on the Isles of Scilly in my constituency or, indeed, consumers who live in rural as opposed to urban areas within that company's supply system?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

We are extremely conscious of the anxiety that is felt in areas such as the Scilly Isles and the south-west. We recognise that it is a serious problem. We are sure that, when we make our proposals, my hon. Friend will be happy with them.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

To ask the Secretary of State for Energy, pursuant to his answer of 9 May, Official Report, column 3, what information he has as to how many distributor-controlled systems of the type now proposed for the privatisation of elecricity in the United Kingdom have been set up on the advice of his Department's technical advisers, Merz and McLennan, in the other countries in which they have helped to install grid systems; and if he will make a statement.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

Merz and McLennan have worked in many countries on grid systems with a wide variety of ownerships and structures.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

I should like to thank the Minister publicly for giving up an hour and a quarter of his time to see my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), the hon. Member for Bedfordshire, North (Sir T. Skeet) and myself on the control of the grid. However, have Merz and McLennan ever anywhere in the world put forward a technological experiment as they have in Britain? Is this not an experiment?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

I thank the hon. Gentleman for the first part of his question, but the implication behind the rest of it is that we in this country are different. He is right, because Britain is virtually unique today in distinguishing between distribution and generation. Our proposals merely develop that in the interests of the consumer. The hon. Gentleman may be interested to know that many systems and companies in the United States are now pressing hard to be allowed to go the same way as we are going here, which shows that to be unique is not necessarily to be wrong.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

One of the weaknesses of the greater competition and lower prices argument for the distributors might be that they retain a powerful geographical monopoly in their areas. Does my hon. Friend agree that one of the ways in which that might be reduced or mitigated is to make sure that the retail operations in the showrooms and so on have full transparency and genuine competition both among themselves on different areas and with the private sector?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

It will be the Government's intention to ensure that there is transparency of the accounts of the distribution companies' retail outlets.