Clause 80

Part of Counter-Terrorism Bill – in a Public Bill Committee at 1:00 pm on 15 May 2008.

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Photo of Tony McNulty Tony McNulty Minister of State (Security, Counter-terrorism, Crime and Policing), Home Office 1:00, 15 May 2008

I am very happy to do that and will, if I may, treat this as a clause stand part debate as well, effectively.

Clause 80 provides the means for a designated gas transporter to recover any payment or cost that he has incurred with respect to the provision of extra policing at gas facilities. A designated gas transporter will be able to recover any payments he has made or costs that he has incurred from consumers via the regulatory arrangements in place for the term of the gas transporter’s transmission charges. We wish to ensure that the recovery of any payments made or costs incurred by a transporter is without detriment to the transporter’s finances and is not at risk of a future change of view as to how those payments or costs are to be treated by the industry regulator.

In crafting the recovery mechanism, we have provided that the mechanism applies despite anything in the gas transporter’s licence, issued under section 7 of the Gas Act 1986, that would prevent the transporter from recovering such payments or costs.

Amendment No. 203 would remove the provision in subsection (3) which disapplies any licence condition that would hinder or obstruct the recovery of payment or costs made or incurred by the gas transporter. In addition, our consultations with the industry show that they desire certainty—quite naturally—and have agreed to this recovery mechanism on the assurance that there would be no obstacles to them being able to get reimbursement of the policing costs placed on them by the Secretary of State. As a result, removal of the provision could seriously impede the ability of the Secretary of State to recover the costs of extra policing.

Amendment No. 204 appears to attempt to restrict the Secretary of State’s means to implement cost recovery for police deployment. To facilitate the recovery of payments made or charges incurred by the gas transporter, subsection (4) of clause 80 provides a means for the Secretary of State to direct the industry regulator to allow the payments made and costs incurred by the gas transporter to be taken into account in determining the transporter’s charges, either in determining its current year charges or by allowing the designated transporter to take the costs into account as an allowable regulatory cost over an agreed longer period.

In short, the provision allows the Secretary of State to direct the regulator to ensure that the designated gas transporter is able to recover its costs for policing. The amendment removes the ability of the Secretary of State to direct the regulator to treat the costs of the designated gas transporter in a particular way—for example, as if they were operating expenditure for the purposes of the regular price control mechanism. That would negate the proposed recovery mechanisms of clauses 79 to 82, so I would ask that the amendment be withdrawn.

The difficulty is imposing a recovery mechanism on an industry that, quite rightly, already has a rather complex regulatory framework under Ofgem. I apologise for the clumsiness of the architecture, but we are trying to deal with existing law, the regulatory framework and the new elements, and that explains the complexity. In that context, I would ask that the amendment be withdrawn.