Energy Bill [HL]

Lord Grantchester Excerpts

Tuesday 15th March 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, one matter which is not dealt with in the amendment—I do not know what my noble friend’s reaction to this will be—is the question of the training of the technicians whose job it will be to install the new smart meters. Some noble Lords may recollect that I pursued this issue over the past year or two with the previous Government. I was informed that the sector skills council which dealt with this—the Energy and Utility Sector Skills Council—had applied for the necessary financial support to enable it to lay out a training programme for smart meter installers, only to be told that that could not be done under the then system, which I hope is in the process of being changed. I raised the matter with the previous Government and the noble Lord, Lord Hunt of Kings Heath, who undertook to look seriously at it, and I have pursued it with other Ministers in the present Government.

Attention needs to be given to this matter because, as a number of speakers have said, if people are going to go into consumers’ houses it is important that they are properly trained to do the work. If eventually, as I have heard said, we are going to have combined gas and electricity meters—but perhaps not at the first stage—that will require a considerable new approach to training.

I have supported the smart meter programme from the beginning and have had some representations—not pressure; that would be the wrong word—made to me that it is a con trick in favour of electricity suppliers and distributors. I do not for one moment accept that argument. As speakers on all sides of the House have said, if it is properly handled and people are given all the information that they should have, which is very important, this could be of real value to consumers. The noble Lord, Lord Whitty, was wise to say that he did not really expect the Government at this stage to accept the amendment but, at some stage, something of this kind will be needed and I hope that it will cover the training of technicians as well as the other matters set out in the amendment.

[Lord Grantchester]

My Lords, it is clear that smart meters will play an important part in identifying energy usage to consumers and highlighting the impact of energy efficiency measures in the home. Consumer confidence in their operation is crucial.

The noble Baroness, Lady Northover, dealt comprehensively on Report with the intentions behind the amendments and gave a full account of the work her department was doing with the industry and in the discussions regarding a code of practice. It is important that the Government show leadership in this area. The House looks forward to receiving the noble Baroness’s department’s conclusions on this process, as there will clearly be a need for further work to develop the benefits and underline the importance of consumer engagement.

It is important that there is a strong programme on the management of the operation of smart meters, and we support my noble friend’s call that the department reports to Parliament on the measurement of the benefits they will bring to enable full accountability to take place.

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[Baroness Parminter]

I add our support for the noble Lord, Lord Whitty, in raising this important issue about creating a level playing field between the respective players in using the marine environment and the seabed. I also thank him for highlighting again, as he has done so eloquently in the past, the risk that not tackling this issue of the leases that can be rescinded by the Crown Estate will cause huge problems for future investment in renewable energy. While they may have taken six years to potter around on this issue, the Government know—as we in this House all know—that, if they are to meet their targets on renewable energy, this issue has to be resolved very quickly to get the future investment in renewable energy.

My slight concern with this amendment is that it seeks to draw out one particular problem out of the complex number of issues that make up the jigsaw of coexistence between the respective oil and gas companies and those involved in renewable energy. As RenewableUK said,

“efforts to work together to prevent problems are far more likely to succeed if a fair and clear framework for co-operation is established”.

While I support this amendment—because it is right to raise this important issue that leases can be rescinded—I am concerned that it draws out only one particular issue in the jigsaw. If we are to get an equitable solution that all parties can agree to, there is still merit in looking at all those issues together.

Therefore, if the Minister is not minded to accept this amendment, I and other Members of this House would be grateful to know that the ministerial team is working now, with all parties, to agree such a fair and clear framework for co-operation that covers all the issues, not just the—admittedly important—issues around the termination of leases. If that framework can be agreed, which I hope can be achieved during the passage of the Bill as it goes to another place and comes back, that would give Members in this House the confidence that the Government recognise this issue, which has been raised by both sides of the House. The present state of affairs, whereby the leases can be rescinded for offshore wind if oil and gas companies come ahead with proposals, is not satisfactory, will not deliver the Government’s objectives for renewable energy and does not create a level playing field.

[Lord Grantchester]

My Lords, it is important to promote the coexistence of UK oil and gas interests with offshore renewable energy expansion. We all want to maximise the growth of both sectors in the UK and thereby to enable the UK to benefit from sustainable electricity supply, strong oil and gas revenues and job creation in both sectors. As I understand it, there is an imbalance in the rights under the lease, according to whether the lease is in the hands of the oil and gas industry or the renewable wind industry. Where the oil and gas industry has an existing lease from the Crown Estate, the renewable industry can encroach on that territory only through commercial negotiation. Where the renewable industry has the lease, a clause in that lease gives the Secretary of State powers to terminate offshore wind-farm leases in favour of oil and gas and does not specify whether compensation would be due or how that amount would become due. This causes alarm in the renewable offshore wind industry that it could stifle investment in developing sites.

My noble friend brings forward his amendment to resolve the situation through the operation of a compensation scheme to cover the situation where the Secretary of State may be minded to terminate a lease in favour of the oil and gas industry. This scheme would give renewable developers the assurance that they feel they need to overcome reluctance to invest in developing a lease where it could be thought encroachment may happen from oil and gas operations. We understand there has never been—and, indeed, there is unlikely to be—such an occurrence. However, the renewable industry has the perception that the possibility of an early termination is detrimental to its financing and the exploitation of leases. This amendment seeks to end that uncertainty and uneasiness in the investor market.

I am sure the Minister would want to find a way to end the antagonism between the two key developers in the operation of leases. Can he give further assurances today, or even offer to facilitate a meeting with his department, so that the two protagonists could agree and cement a way forward?

[Lord Marland]

My Lords, I am very grateful to the noble Lord, Lord Whitty, for pointing out this particular area. We find ourselves perhaps in the crossfire between two interested bodies: RenewableUK and Oil & Gas UK, both of which are fighting for their own corners.

I am afraid I am attracted by the second option—I think it was the second option—to carry on the dialogue. We do not believe that the issue has been going on for six years, but I am very grateful for the historical information, which officials had not imparted to me. I think it is attractive for us to carry on the dialogue and, I might say, knock heads together, because it is important that we get these boundaries clearly defined. As the noble Lord, Lord Oxburgh, and the noble Baroness, Lady Parminter, both said, this is a complex thing that cannot be done quickly and needs negotiation. It needs both parties to come to the table to help us find the correct solution. The Government are immensely committed to it because it is important and therefore I am extremely grateful that this matter has been raised, but noble Lords have our assurance that we are pressing on with the negotiation. We intend to have a resolution, particularly as the renewables industry develops, as soon as possible, but we are in earnest.

I want to clarify something from Hansard that the noble Lord, Lord Whitty, said my noble friend Lady Northover said. Let me read out—another rare event for me—what the statement, in case he hears it incorrectly, should have said: I am happy to repeat the assurances we gave in Committee that where the oil company is not prepared to offer appropriate compensation, the Secretary of State will not intervene, on behalf of oil companies, and therefore the oil and gas development will not be permitted. I hope that clarifies that fundamental point.

With that, I hope the noble Lord will withdraw his amendment.