Clause 44

Energy Bill – in a Public Bill Committee at on 4 March 2008.

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Modification of approved programme

Question proposed [this day], That the clause stand part of the Bill.

Question again proposed.

Photo of Charles Hendry Charles Hendry Shadow Minister (Business, Enterprise and Regulatory Reform)

Welcome to the Chair, Mrs. Humble, for this afternoon’s proceedings.

My concerns about clause 44 and subsequent clauses centre on the extensive power that they will give to the Secretary of State, and I hope that the Minister will shortly be in a position to give us greater clarity on the proposals.

Our principal concern is that companies that will be asked, or will volunteer, to build nuclear power stations will want as much clarity as possible. The clauses give the Secretary of State tremendous powers to alter what is required of those companies. Will the Minister give us information on the possible time scales? Do the clauses relate to programmes before decommissioning starts, or will the power relate to changing the decommissioning programme once it is in place? There could be a major difference in how it is applied.

What if significant extra costs are involved which the decommissioning fund is not initially set up to cover and the programme becomes very expensive? That comes back to the Liberal Democrat amendment proposed this morning. How will those extra costs be factored in when the Secretary of State requires those companies to be involved in the fund? How much notice will the Secretary of State have to give of the changes that are being proposed? If the notice is given while the decommissioning is under way, is there provision whereby he can say, “This must start tomorrow or next week”, or will he expect those arrangements to allow for many years of planning before they come into force?

Photo of Malcolm Wicks Malcolm Wicks Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform

Welcome to the Chair for this afternoon’s sitting, Mrs. Humble.

With your permission, Mrs. Humble, I would like to correct for the record a response that I made this morning, as it might be helpful to the Committee. In answer to the hon. Member for Cheltenham, I explained that the Paris convention, to which the UK is a signatory, sets out a financial limit for operator liability in the event of a nuclear incident above which public funds may be used to meet third-party liability. I  should have referred to the fact that the convention, not EU law, sets a minimum level rather than a limit. That was my error.

Under the Paris convention, the usual limit is currently 15 million special drawing rights, which is about £12 million. The UK has gone further than that; we have chosen to exceed the normal maximum limit per incident in our implementing legislation by setting the normal level at £140 million.

The Government are currently analysing options for nuclear operators to obtain financial security for new heads of damages set out in the amending protocol to the Paris convention. We intend to publish a consultation document on the amended convention later this year. I apologise to the Committee for getting that wrong. Nevertheless, I hope that what I have said further satisfies the Liberal Democrats in relation to taxpayer protection.

The hon. Member for Wealden raised the issue of what we mean by “unreasonable delay”. Again, I would like to be as helpful as I can in answering, but I cannot be arithmetically precise. First, the time involved in considering the proposal will depend on its quality and complexity. If it is of a lower quality, we will understandably wish to seek clarity, which will necessarily involve additional time. If the proposed programme involves complex financial arrangements, for example, that will also be likely to involve a longer period of consideration.

Secondly, there are statutory procedures that we must follow, such as consulting the Health and Safety Executive and the Environment Agency, or its equivalent in Northern Ireland. In addition, we would expect to consult the new board, which might also need to obtain expert advice. Thirdly, if the Secretary of State was minded to require a modification, he must give the operator and others with obligations under the programme an opportunity to make written representations.

To try to give a more precise answer to the hon. Gentleman, we might be talking about three to six months for the straightforward cases. For more complex cases, it could take a month or two more than that estimate. Estimates will necessarily be linked to the particular case under consideration. However, it is in no one’s interest for that process to be either rushed, or unnecessarily or unreasonably delayed.

The hon. Gentleman also asked whether the Secretary of State’s power unilaterally to modify an approved programme might create uncertainty for the operator. When the Secretary of State approves a programme, he does so to ensure that prudent provision has been made for the technical matters and for the financing of designated technical matters. Where he approves a programme, the Secretary of State is saying that it meets this requirement and that it adequately addresses the matters set out in the guidance, currently out to consultation, to be issued under clause 50.

It is important that the Secretary of State retains the power to modify an approved programme because it is an important part of the enforcement regime. In such circumstances, the Secretary of State might exercise the power to modify or impose an obligation to ensure that the necessary actions were carried out to bring the programme back into line with the approved programme. He might impose obligations to ensure that the breach did not occur again. It also enables him  to respond to changes in circumstances such as a change of control of the operator, as set out in more detail in the funding guidance as part of the funded decommissioning programme guidance consultation currently under way.

The Secretary of State might make a modification or impose an obligation where it is felt that the programme no longer meets the principles set out in guidance, or perhaps where the robustness of an associate body’s provision for financial security is reduced. That would be one answer to that question.

The procedure for making a modification is set out in clause 45 and, for example, we must consult the interested bodies before making a notification. Ideally, we would work with the operator to make a modification. However, in a quick change in circumstances, such as when there is a change in the control of the operator, the modification might have to be very quick indeed. The hon. Gentleman will understand that I cannot be precise, but I hope that is a helpful answer.

Question put and agreed to.

Clause 44 ordered to stand part of the Bill.