Electricity and Gas (Internal Markets) Regulations 2011

Lord Dixon-Smith Excerpts

Monday 17th October 2011 Grand Committee

I hope that the Committee will agree that these regulations represent a sensible transposition of the third package requirements. They will improve the functioning of our energy markets and bring real benefits to consumers while improving our long-term security of supply. I therefore commend them to the Committee.

[Lord Dixon-Smith]

My Lords, I am grateful to the Minister for his explanation, which means that I now understand a very small part of these regulations a bit better than I did. I found it infinitely depressing when I went to the Printed Paper Office and suddenly found myself presented with 197 pages of regulation and 184 pages of Explanatory Notes. If anybody in this Room is familiar with the content of all of them, I would be very surprised. I do not doubt that there are plenty of people who know how to reference every little last word, but do not think that it is possible for anybody to put their hand on their heart and say that they are familiar with it all.

I am really interested only in part 9. I will admit that I had representations made to me by one of the electricity companies, which was concerned about it for two or three reasons. First, although some might argue that the previous arrangements were a bit cosy, the licensees have to work very closely with Ofgem in forming any regulation. The result is that on the whole there is a great degree of agreement between the two when the regulations come out. Of course, the right to appeal to the Competition Commission is always there in the background.

Part 9 introduces this new body, the European Agency for the Cooperation of Energy Regulators. I really wonder how that was written into the European treaty. I assume that it must be a treaty matter; otherwise, how do we come to have a European body that can tell national Governments what to do? However, the Northern Irish can apparently get away with it, because they are only a devolved authority, but they have the power to say that this provision does not apply to them, as I understand it. The Minister may be able to explain that.

What concerns me is that we still have the appeals process to the Competition Commission, which is fine—but what is the relationship between the commission and ACER? If there is an appeal, which is upheld and is against what might be described as a binding decision of the new regulatory body, what happens? Do we have a power over it? I find a bit of confusion in the first paragraph, where it says why DECC is proposing these regulations, stating:

“The Third Package requires Member States to ensure that national regulatory authorities are able to take autonomous decisions”—

that is fine—

“and implement any binding decisions”.

Okay, but binding decisions are certainly not autonomous. Then we have an appeal mechanism, which can set the whole lot aside. I would be very grateful if the Minister could explain to me rather better how that relationship will actually work in practice. At the moment it looks a bit like a recipe for finishing up in the divorce courts.