Clause 79 - Power of the Gas and Electricity Markets Authority to direct a modification of the Uniform Network Code

Energy Bill [Lords] – in a Public Bill Committee at 4:45 pm on 16th June 2011.

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

Photo of Huw Irranca-Davies Huw Irranca-Davies Shadow Minister (Energy and Climate Change)

I have a brief question. I welcome the clause, which does a lot of good things, and the Minister is to be congratulated. One question arises from it: does he see any future role for a public service obligation as a belt and braces, or is he confident that the clause will give us gas security?

Photo of Charles Hendry Charles Hendry The Minister of State, Department of Energy and Climate Change

I am grateful to the shadow Minister for that question, which goes to the nub of where we are on the issue. The United Kingdom does not have enough gas storage at the moment. As we move increasingly to becoming net importers of gas in particular—60% of our gas could be imported by the end of the decade—we must have a variety of ways to ensure that the consumer has security.

The investment secured under the previous Government in the liquefied natural gas terminals in south Wales and the Thames, and the Langeled pipeline to Norway, have dramatically enhanced our energy security. We had the coldest December for about 100 years, but we came through it without pressure on consumers. It might have been more challenging if we had followed it with a very cold January and February, but when we are becoming more reliant on imports, energy security will be an important part of the process.

However, we still want the market to deliver a solution. Storage is one part of that solution rather than the only part. I hope that our approach is creating a framework that will put much greater financial penalties on companies  that fail to meet their supply obligations and so incentivise them to invest in whatever technology they think is most appropriate: gas storage, long-term contracts either through shipments or pipelines, or interruptible contracts with their customers, which would ensure that they found a way to deliver on their commitments. I hope that that will deliver more investment in gas storage. Rather than being too prescriptive, it is right that we try to use a market mechanism to give the industry the ability to react as it sees best to that process. I hope that reassures the hon. Gentleman.

Question put and agreed to.

Clause 79 accordingly ordered to stand part of the Bill.