Electricity Market Reform

Baroness Smith of Basildon Excerpts

Thursday 16th December 2010 Lords Chamber

[Baroness Smith of Basildon]

My Lords, I thank the Minister and his departmental colleagues for giving us early sight of today’s Statement. Given the other business before the House, it was helpful to have that advance notice. We certainly welcome the Statement and the high-level recognition of the issues that we as a nation have to tackle.

I want to highlight four key issues that come across in the consultation document: first, security of supply; secondly, the ability to achieve our green targets in the longer term as well as through short-term measures; thirdly, securing the investment of around £200 billion that is needed in order to grow those businesses that will help us to achieve those targets and energy security; finally and crucially, keeping energy prices reasonable. The Minister will be aware of the press speculation today, which has already caused great concern. We face a huge challenge, but the consumer must not bear the whole or too great a burden.

I make it clear that we on this side of the House believe that the programme is absolutely necessary to support security in energy for the future and that we will support sensible, fair mechanisms for reform. Today, we welcome the publication of the paper and the consultation, because it is crucial that the Government put in place the mechanisms to make new low-carbon investment attractive. They also have to bridge the looming energy gap that we face without a rush for unabated fossil fuel generation. The Government also have to provide energy security across a balanced and diverse energy portfolio while considering, at all stages, fairness and affordability for the customer. Although increased energy bills have become a reality, we cannot ask consumers to accept ever increasing bills. We must be able to give them genuine assurances that we are doing all that we can to protect them.

I shall ask the Minister a few questions. The paper is an electricity market reform proposal but, given that we enter this winter with the worst gas storage, do the Government also intend to bring forward some proposals for gas security? Can the Minister also assure us that the Government are committed to low-carbon growth and stimulating investment? Given the welcome announcement today that the green investment bank is to go ahead, what role is the bank likely to play in that?

There are a number of challenges and the Government have to seize this opportunity, which is why we welcome today’s Statement. However, investment and certainty are paramount. The energy security of the nation means that we cannot allow any delays. We have to act, and act fast. The noble Lord knows that the industry needs certainty if it is to invest at the scale needed. Are the Government able to provide certainty to the industry and to people who are already paying inflated energy bills? Will the programme being put forward today be enough to encourage energy companies to invest in the UK, to create the jobs that this country needs—and the skills to fill them—and to protect customers from unaffordable energy bills?

A number of issues are before your Lordships’ House at present. We have had this consultation; we have the Second Reading of the Energy Bill next week; we have the announcement today of the green investment bank; and we have the Treasury consultation on carbon prices. It is all part of a bigger picture, along with the review of Ofgem. Noble Lords will be aware that the Energy Bill has been introduced and is being debated next week. We certainly welcome the Bill and the opportunity to work with the Government on it, but it presents as many questions as it answers about the Government’s intention on energy policy while, as we can see, much of the detail of the green deal is intended to be included in regulations. I look forward to the Delegated Powers and Regulatory Reform Committee’s analysis of the Bill and to debating the substance of the policies as the Bill goes through the House, so that we can play our part in working with the Government to address these issues.

Finally, we entirely agree with the Minister and the Government about the importance of this Statement and the consultation. This is the once-in-a-generation opportunity that he referred to. As always, we are prepared to work with him and his Government constructively to ensure that we achieve the triple goals of fairness for consumers, a better environment and energy security.