Energy Bill

Debate between Lord Crickhowell and Baroness Verma

Thursday 18th July 2013 Grand Committee

[Lord Crickhowell]

My Lords, I had not intended to intervene but, while listening to this debate and agreeing with what has been said, particularly during the recent speeches, I was also glancing at the Explanatory Notes to the Bill. It is rather interesting that under Chapter 6 the Government have an essay on access to markets. The notes refer to wholesale market liquidity as,

“an important feature of a competitive market. It provides market participants with a route to market, risk management opportunities and investment and operational signals”.

It goes on to talk about the importance of liquidity and, further down, it says:

“Independent developers have played an important role in delivering new capacity in the renewable and gas generation sectors and could play a key role in meeting the Government’s goals and deliver essential investment in the future, provided market conditions are right”.

Having said all that, surely it is entirely appropriate that, when we get on to electricity market reform and the duties placed on the Secretary of State, the points made by my noble friend in this amendment should indeed be there. If these are the matters that the Government consider important in their introduction to Chapter 6, it must surely be right that this should be one of the factors that the Secretary of State has to take account of. It should therefore be listed in the Bill.

[Baroness Verma]

My Lords, I thank my noble friend Lord Jenkin and the noble Baroness, Lady Worthington, for their amendments and for the opportunity to debate some of the important issues that they have raised. In relation to Amendment 52, Clause 5 sets out the matters to which the Secretary of State will have regard when carrying out specific EMR functions to meet the objectives of EMR. Effective competition is fundamental to delivering the Government’s energy policy objectives of having energy security, keeping consumers’ bills affordable and decarbonising our energy sector. EMR will deliver the greener energy and reliable supplies that the country needs at the lowest possible cost, which is good news for the consumer, by reducing exposure to volatile and rising fossil fuel prices and securing electricity supply.

Increasing competition in the electricity market drives down prices and promotes innovation—hence competition will be considered in the context of the requirement at Clause 5(2)(d) to consider the likely cost to the consumer. For example, we are designing the capacity market in a way that promotes competition —in particular, between incumbents and the new entrants that my noble friend Lord Jenkin is anxious to see. By providing a steady revenue stream in place of dependence on volatile scarcity prices, the capacity market will help to ensure that we can enable broad participation. Furthermore, we are incentivising new investment in plants by offering longer-term contracts to new plants, which will enable the costs of capital to be spread over longer periods. This will be important in ensuring that new independent entrants can compete with incumbents, as they would be likely to find it difficult to access finance with a short-term contract.

However, it is important to note that independent generators are a broad mix. They are not just medium or small-scale firms. Some are large European or international utilities, such as GDF Suez, which do not currently have a major presence in the UK wholesale or retail market. To ensure that we capture the interests of this broad group, we have been working, and will continue to work, with the independent generators’ group on the design of the capacity market.

The Government are also addressing problems affecting competition within the market. This includes poor liquidity in the wholesale electricity market and tariff complexity in the retail energy market. We are working with Ofgem to tackle these now, and have taken back-stop powers in relation to both areas in this Bill to ensure that reforms can still be driven forward if Ofgem’s proposals are either frustrated or delayed.

We recognise that it is important to help independent generators to secure access to the market. We are aware of their concerns that it is becoming more difficult to secure a power purchase agreement and that terms have declined. We have been working to gain a better understanding of the complex PPA market and the investment issues for independents. Since last year’s call for evidence on access to markets, we have undertaken analysis of the issues and the potential options for addressing them. I hope to provide further information to the Committee on this very shortly.

The ultimate aim of electricity market reform is to allow all forms of electricity generation to compete fairly, and therefore to enable the least-cost mix of generation and demand-side measures necessary to meet our decarbonisation targets, ensure security of electricity supply and keep costs to consumers as low as possible. I hope that noble Lords will be reassured that competition is therefore at the heart of the design of all EMR functions. Consequently, it is the Government’s view that my noble friend’s amendment to Clause 5 is unnecessary.

Turning to Amendment 52A, throughout the development of EMR we have been clear on the objectives of these reforms. They have been set out in our published documents, from the EMR White Paper of July 2011 onwards, and the objectives set out in Clause 5 reflect these. The amendment would add the duties set out in Sections 3A to 3D of the Electricity Act 1989 to these objectives in Clause 5. However, the Electricity Act 1989 relates to the operation and regulation of the market, which is a different purpose from the new mechanisms that we are introducing through EMR. Contracts for difference and the capacity market are designed to complement the existing market structure and have been developed with the specific objective of moving to a secure, low-carbon energy mix at least cost to the consumer.

Furthermore, the amendment would risk causing duplication. For example, Section 3A(2)(a) of the Electricity Act 1989 relates to ensuring that electricity demands are met, and this would duplicate Clause 5(2)(c) of the Bill. We have made clear the importance of considering the cost to consumers at Clause 5(2)(d).

I turn now to Amendments 54 and 55, linking the principal objectives and duties in Clause 33 to the Secretary of State in relation to the capacity market. The purpose of this clause is to align the principal objective and general duties of the authority, in carrying out functions in the capacity market, with its principal objective and duties in the current electricity market. The reason this clause does not apply to the Secretary of State is that Clause 5(2) in Chapter 1 sets out what the Secretary of State must have regard to in relation to making capacity market regulations, as well as other EMR functions.

As I have already indicated, encouraging competition will be central to the way that the Secretary of State makes capacity market regulations. Promoting competition will be an effective way of achieving the aims of having regard to ensuring security of supply to electricity consumers and having regard to the likely cost to electricity consumers. We feel that it is impractical to require the Secretary of State to have regard to two separate lists of matters: those in Clause 5 as well as the principal objective and general duties in the Electricity Act 1989.

I hope that I have been able to reassure my noble friend and the noble Baroness, Lady Worthington, with my explanations and that my noble friend will feel content to withdraw his amendment.

Energy Bill

Debate between Lord Crickhowell and Baroness Verma

Tuesday 16th July 2013 Grand Committee

[Lord Crickhowell]

With great respect, I do not believe that I said anything of the kind. However, I will read the text of what I really said tomorrow with interest, to discover how I was interpreted as saying that.

[Baroness Verma]

I stand corrected by my noble friend. I would, however, reassure my noble friend that decisions on policy are taken by Ministers; we have to take advice from officials, as well as other experts, but ultimately we will be responsible for those decisions.

[Lord Crickhowell]

That was the point that I dealt with in my speech, based on my own experience. I was going to intervene to say that I did not understand my noble friend’s comment that she feared that following the suggestions of this advisory committee might reduce ministerial responsibility. We already have the precedent of the nuclear advisory board; we also have the precedent that I described of the advice that my National Rivers Authority advisory board gave to the Government and then the National Rivers Authority itself. In none of those cases was there the slightest reduction in ministerial responsibility and I cannot conceive that a committee of the kind suggested could possibly have that outcome.

[Baroness Verma]

My Lords, if I choose to slightly disagree with my noble friend, that is perhaps a position that I will stand corrected on. However, given that we have so many forums and advisory groups in place, I do not believe that we need a further one. If I am allowed to get to the end of my speaking notes, noble Lords may be relieved to know that, having noted the significance attributed to this advisory group by noble Lords, I may go back and reflect on what has been said in Hansard. I see that the noble Baroness wishes to intervene at this point.

Severn Barrage

Debate between Lord Crickhowell and Baroness Verma

Thursday 17th January 2013 Lords Chamber

[Baroness Verma]

My Lords, in my Answer to the noble Lord, Lord Hylton, I laid out that we are taking all proposals very seriously. However, as the noble Lord will be aware, it would not be right for the Government to take a decision until they are completely satisfied that the mitigation plans against environmental impacts that need to be in place are in place. We have made it clear to all consortia that we are interested in looking at how we can harness energy. We need a good mixture of energy but we also need to ensure that it is viable economically and environmentally.

[Lord Crickhowell]

My Lords, is my noble friend aware that I have studied the latest proposals for the scheme extremely carefully? I agree that they are at the most rudimentary stage. The only positive feature that I could find in them is that the noble Lord, Lord Rowe-Beddoe, is a non-executive director.

Army 2020

Debate between Lord Crickhowell and Baroness Verma

Thursday 5th July 2012 Lords Chamber

[Lord Anderson of Swansea]

My Lords—

[Baroness Verma]

My Lords, I think that it is the turn of the Conservative Benches.

[Lord Crickhowell]

I fully understand why this is being done and I fear that £38 billion is probably an underestimate. The noble Lord, Lord Ramsbotham, referred to leaks. There is one other feature of this Statement which I regret: it disguises the historic names which are disappearing. My noble friend referred to “current regimental names” and the Statement named the 2nd and 3rd Battalions. However, the 1st Battalion The Royal Regiment of Wales, carries the title “1st Battalion Royal Regiment of Wales (Royal Welch Fusiliers)”. I do not know, now that the 2nd Battalion is to disappear, whether that historic name can be retained or what other historic names can be retained. Luckily, we have retained, I believe, in the Royal Regiment of Wales the historic flash, the hackle and other regimental insignia. I hope that in future Statements an explanation is given of exactly which historic regiments are going and how their traditions are to be maintained as far as possible, because they are of great importance when it comes to pride and to recruiting in the areas concerned.

Women: Public Bodies and Listed Companies

Debate between Lord Crickhowell and Baroness Verma

Thursday 15th July 2010 Lords Chamber

[Baroness Verma]

My Lords, I think the noble Lord’s question is slightly outside my briefing. The gender pay gap has fallen over the past 30 years but it still persists. There is lots of work to be done, but we are taking a range of measures to end discrimination in the workplace.

[Lord Crickhowell]

My Lords, my noble friend may recall that some of the shortcomings of the report of the Senior Salaries Review Body on the work of this House might have been avoided if some women had been members of that review body. Can the Minister tell me whether anything has been done to put right that rather shameful state of affairs?

[Baroness Verma]

My Lords, I thank my noble friend for that very important question. I shall reflect on it.