Energy Bill

Part of the debate – in the House of Lords at 4:15 pm on 28 October 2008.

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Photo of Lord Teverson Lord Teverson Whip, Spokesperson in the Lords, Environment, Food & Rural Affairs 4:15, 28 October 2008

My Lords, I suspect that we will be talking a little more about smart metering as the afternoon progresses. Stranding is a very important issue that needs to be resolved in moving the smart meter agenda forward. Therefore, I welcome the amendments.

If we look at this from a business point of view, the problem of the stranding of assets is one of the balance sheet, and having to take a book loss, rather than of cash, as the cash has already been expended. The book loss on the company is real in terms of its accounting, but might not be such a problem if there were a real cash movement at the time. However, the cash investment has to be made for the smart meters.

I shall be interested in the Minister's reply, because that factor needs to be borne in mind. Another factor is that smart meters, once installed, should reduce the running costs of power companies through much easier billing and automatic feedback of readings, avoiding inspection costs. All companies have to deal with the problem of technical obsolescence before the end of the book life of an asset. One could say that that is their problem for having depreciated these assets over 20 years. Where else in the world does one do that these days outside buildings? I will be interested to hear the Minister's view on the responsibility that the various organisations concerned should take for past decisions.