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Clause 16 - Conditions of licences under Gas Act 1986: payments to other licence-holders

Growth and Infrastructure Bill – in a Public Bill Committee at 10:15 am on 4th December 2012.

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

Photo of Michael Fallon Michael Fallon The Minister of State, Department for Business, Innovation and Skills

As no amendments have been tabled, I would not want the importance of the clause to go unremarked.

The Gas Act 1986 provides the basis for regulating the British gas market. Clause 16 amends the Gas Act in order to clarify that licences granted by the regulator to gas network companies may contain a requirement for them to increase their charges and transfer the monies raised to other licensed gas companies, including network companies. The law as currently drafted could be interpreted in different ways. This amending clause puts the issue beyond doubt.

The current regulatory uncertainty is preventing Ofgem, the regulator, from launching its gas network innovation competition, as the funding for that competition relies on Ofgem requiring gas network companies to raise and transfer monies to network companies that are successful in the competition.

The gas network innovation competition will see some £160 million invested by gas network companies into the gas infrastructure to improve the efficiency of the grid and to promote innovation. Greater efficiency and innovation in our gas networks will put downward pressure on consumer bills, support our decarbonisation agenda and help the networks adapt to meet challenges in the security of supply. Once the clarification takes effect, Ofgem will be able to put in place the licence conditions required to establish the network innovation competition, following its normal statutory process.

The clause is important, and I hope that the Committee will allow it to stand part of the Bill.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I do not have many comments on the clause. We accept that clauses 15 to 18 are pretty much technical provisions that tidy up existing legislation, which should lead to greater transparency in the future.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.