Clause 81

Energy Bill – in a Public Bill Committee at 12:30 pm on 11 March 2008.

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Power to amend licence conditions: gas

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

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

I thought that we were still into smart meters and I was awaiting the excitement of the vote, but that comes later, does it not? That is what threw me.

Clause 81 needs to be regarded partly in the context of the group of clauses. We have just voted on clause 80 so unanimously because we know that it makes a number of minor and consequential amendments to the Gas Act 1986, to supplement the substantive transfer of functions in relation to gas meters made by clause 79.

Before the transfer, functions under section 17 of the Act and related regulations are the responsibility of Ofgem. Where the legislation mentions those Ofgem employees who carry out such functions, it refers to them as members of the director’s staff. To reflect the transfer of responsibilities and to future-proof the provisions against possible machinery of government changes, it is proposed to replace the references to members of the director’s—Ofgem’s—staff with more general references to persons employed in the civil service of the state.

Most of the functions covered in the transfer are carried out by appointed meter examiners, but not all meter examiners are civil servants, and they still need to be paid. Clause 80(4) therefore makes provision to allow payment of those examiners who are not employed in the civil service of the state, including in respect of any pensions payable. I am therefore grateful that colleagues supported that clause.

Clause 81 is necessary to ensure that the National Weights and Measures Laboratory can recover the costs associated with functions relating to the standards and accuracy of meters under section 17 of the Gas Act 1986. Responsibility for those functions currently rests with Ofgem, which is funded for that purpose by a licence fee paid by pipes and wires companies. Those are the companies that transfer gas and electricity through the networks—the gas transporters and the electricity transmission and distribution operators.

The cost of such fees is then passed on to other groups operating in the competitive gas market, such as the suppliers themselves, as part of the normal charging arrangements for use of network services. Given that the licence fee is currently collected by Ofgem, however, we need to find a way of ensuring that the laboratory, which is concerned with metrology, can recover any costs associated with its new responsibilities under section 17 of the Act.

The solution proposed in the clause reflects the model already used for energywatch. Put simply, Ofgem will continue to collect the money attributable to such functions from the pipes and wires companies through the licence fee. However, the money will pass directly into the consolidated fund, from which the laboratory can then recover it. That is the least burdensome approach, because licensees are not required to change arrangements for the payment of fees, and the laboratory does not need to set up any new complex financial system.

A requirement for the Secretary of State to consult on and publish any modifications provides protection for licence payers. The power itself is available only for a period of six months following commencement because it is envisaged that only one licence modification will be required.

As I have explained, this important clause represents no additional burden to the pipes and wires companies that receive and pay for the service, but it ensures that the National Weights and Measures Laboratory can recover its costs for the transferred work that it will undertake.

Question put and agreed to.

Clause 81 ordered to stand part of the Bill.