Clause 4 - Amendments of the Utilities Act 2000

Sustainable Energy Bill – in a Public Bill Committee at 11:15 am on 24 June 2003.

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Question proposed, That the clause stand part of the Bill.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central

With this it will be convenient to discuss new clause 2—Duty of Gas and Electricity Markets Authority to carry out impact assessments.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

When I originally moved clause 4 it was to place on Ofgem a duty to have regard to the treatment of sustainable energy policy. Also, regulatory impact assessments for Ofgem were mentioned in the White Paper. New clause 2 combines those two, and makes it clear that the authority will be required for all its important proposals to undertake impact assessments, including environmental impact assessments, unless it considers the matter one of urgency or that an assessment is unnecessary. Where an assessment is not undertaken because the authority considers it unnecessary, the authority will be required to publish a statement setting out its reasons why.

The new clause requires the authority to be given general guidance in conducting the impact assessment. Hon. Members will be aware that considerable detailed guidance is available on the procedure, scope and content of impact assessments. The assessment must include an environmental assessment, and the authority is obliged in its annual report to give details of assessments conducted. On the basis of that provision, I am persuaded that an additional duty to have regard to a sustainable energy policy is unnecessary as the key elements of sustainability—social, environmental and economic objectives—are already set out. The new clause would achieve the objective that I wanted to achieve in clause 4.

Photo of Andrew Robathan Andrew Robathan Shadow Minister (International Development)

I am willing to take this at face value—I do not think that there is a Government plot, as I do with most of the clauses. However, can the Minister explain whether new clause 2 will address the major mistake that Ofgem made in the implementation of NETA?

The whole idea of NETA should have included an environmental impact assessment; it should have included the impact that NETA would have on driving down electricity prices. It has been successful in achieving that for good or ill. I do not think that the consequences of driving down electricity prices have been as good as we might wish, and we have already heard that electricity prices are bound to rise—I appreciate the reasons for that, although we are keen on efficiency and the generation of production.

There should also have been an assessment of the impact that NETA would have on CHP and renewables. It actually made renewables entirely unproductive: as the Minister knows, people were closing down wind farms because the generation of electricity was not worth it. Will the new clause

specifically address the issue that Ofgem should take into account the environmental impact of its policies? The old clause was designed to do so.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

The new clause will place on the authority a broader requirement than the one that was originally envisaged to undertake and to publish both regulatory and environmental impact assessments, as was outlined by my hon. Friend the Member for Milton Keynes, North-East. I welcome and support that proposal. I cannot tell the Committee what would have been the case if the new clause had been in place before.

There have been some important gains as a result of NETA, but that is for a separate debate. It is right that the new arrangements should be in place. Environmental and regulatory impact assessments should be conducted.

Photo of Andrew Robathan Andrew Robathan Shadow Minister (International Development)

The Minister is new to his job, but his predecessors would accept that the consequences of NETA for CHP and renewable energy were not intended. That is what I am trying to get to the bottom of. We must ensure that further actions by Ofgem do not have NETA's bad, unintended consequences on renewable energy and CHP.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I take the hon. Gentleman's point. He is absolutely right, it was not intended that there would be a damaging impact on CHP. Putting the proposal in place will be a defence against undesirable environmental impacts although one cannot guarantee what will happen, as we cannot predict the future. I commend the new clause to the Committee.

Question put and negatived.

Clause 4 disagreed to.New clause 2Duty of Gas and Electricity Markets Authority to carry out impact assessments