Energy Bill [Ways and Means] (No. 2)

Points of Order – in the House of Commons at 3:33 pm on 18th November 2008.

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Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Energy Bill, it is expedient to authorise the levying of charges by virtue of the Act by the Gas and Electricity Markets Authority in connection with payments relating to the renewable generation of heat.— [Mr. Mike O'Brien.]

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Energy and Climate Change 3:37 pm, 18th November 2008

We are being asked to vote on the Ways and Means resolution on the Energy Bill that provides power for Ofgem to levy charges in connection with the renewable heat obligation. The Minister will know that the renewable heat obligation is vague. It came in only at the last minute of their lordships' consideration of the Bill, and even the Government will accept that we do not really know what it is, what form it will take, or when it will come in. However, we are being asked to nod through a motion that gives powers to Ofgem to levy charges in connection with the obligation.

My understanding is that this problem would not arise if were we talking about feed-in tariffs, because the feed-in tariff from which a person benefits is generally taken through higher charges on other consumers of electricity. However, when it comes to renewable heat, I am not clear what we are giving a blank cheque to Ofgem to do. Will the Minister, when he responds to this short debate, tell the House what powers we are giving to Ofgem, in what circumstances it would levy charges, on what sorts of people, for what purposes, on what scale, and when? It is not without reason that we have been given 45 minutes to explore and probe the provision, and I hope that the Minister tells us what Ofgem would use the power for.

One can see the flip side of the measure, and that a renewable heat incentive would be beneficial to one set of people, but it is not clear who would have to pay Ofgem under the motion. Will the Minister clarify what powers he is asking us to give to Ofgem, in what circumstances, and why?

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Photo of Mike O'Brien Mike O'Brien Minister of State, Department for Energy and Climate Change 3:39 pm, 18th November 2008

This is not a blank cheque. The Government have taken the view that the renewable heat incentive amendments that we will debate shortly should be subject to substantive discussion and consultation, and to a further order in the House in due course. All the amendments to be debated later will do is give us the power, if necessary, to enable Ofgem to levy some charges or make some payments to put the renewable heat incentive in place. In a sense, we are creating a power or an ability to do something, on which we will subsequently consult. If we are to introduce the renewable heat incentive—I think that the hon. Gentleman is in favour of it—the mechanisms must be in place to deliver it. In the debate that follows this one, we can look at what is going to be done in broad terms, knowing that we are essentially creating powers that will at a later stage be the subject of substantive discussion. In due course, further orders will be put through the House. [Interruption.] The hon. Gentleman asks me exactly what levy charges will be made. That is exactly what we will discuss in the subsequent debate on the powers in the Bill.

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Energy and Climate Change

Will the Minister tell me—I may be the only one who does not understand what he is proposing—what sort of organisations Ofgem would be able to take money from? What sort of organisations would pay such charges?

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Photo of Mike O'Brien Mike O'Brien Minister of State, Department for Energy and Climate Change

Essentially, we would need to look at the payments from some of the fossil fuel generators. They would probably—this will be the subject of discussion later—make payments that could then be used to ensure that the renewable heat incentive was substantive or to make compensation payments to those involved in generating that renewable heat. We thus need to create the power to enable that sort of levy to be imposed. As I have said, much of this will be the subject of consultation.

The hon. Gentleman will be aware that some of the amendments resulted from discussions during the Bill's passage both here and in the other place. The Government have been persuaded by some of the arguments, not least from Liberal Democrat and Conservative Members as well as Government Members, so we want to create a series of powers to deal in a detailed way with what needs to be done. We have the broad outline of policy—I think that we all agree with that—but we need to make provision for precise details on the issues raised by the hon. Gentleman about what sort of levy will be imposed and on whom. I have explained who is likely to be affected and how it will be done.

Question put and agreed to.

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