Energy Bill [ Lords ] (Seventh sitting)

Alan Brown Excerpts

Committee stage
Thursday 8th June 2023 Public Bill Committees

[Dr Whitehead]

This debate enables us to count off a few clauses—clauses that are all good stuff. They clarify and facilitate the role, function and activity of ISOP. We have indicated that we would like ISOP’s remit to be widened as far as possible. On the high-level objectives in clause 121, an objective on net zero could shape the widening of ISOP’s responsibilities, because obviously that is what we are all about now, as far as the grid and various other things are considered. A wider remit for ISOP in facilitating net zero is clearly to be desired; that may be a basis on which to build on ISOP’s powers and activities in future.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

As I said earlier, I support the principle behind ISOP, and I support clauses 121 to 123, and will not vote against them. I want to explore a point with the Minister. The explanatory notes on the clauses highlight possible conflicts and tensions between the role of ISOP and the impact of Government policy—of what the Government do. For example, paragraph 345 of the explanatory notes outlines that there is

“a duty on the ISOP to carry out its functions in a way that it considers is best calculated to promote…net zero”.

It also acknowledges that while ISOP is not making decisions on generation mixes, it should still be

“proactively identifying and creating opportunities to facilitate the transition”

to net zero.

Paragraph 347 to the explanatory notes confirms the imposition of a duty on ISOP

“to carry out its functions in a way that it considers best calculated to promote a coordinated electricity and gas”

grid in the interests of the efficiency and economic operation of the grid. Paragraph 352 says:

“The ISOP will take a whole-system approach to coordinating and planning Great Britain’s energy system”.

That is all very logical, and I agree with the principles set out there—they are certainly the most important functions of ISOP in many ways—but how does the Government regulator allow for that, and how do the Government take into account the ISOP’s recommendations?

The Minister rightly pointed out the differences between what the ISOP is looking at and the fact that policy and implementation is the role of Government. To give an example, the National Grid Electricity System Operator already predicts that there will be less nuclear in the grid in any future scenarios compared with what the Government are promising about new nuclear, and that in 2024-25 a quarter of electricity generation will be from nuclear. The reality is that that will not happen. The National Grid ESO does not allow for that in future scenarios, yet the Government still tell us that that is their policy. That is already a clear conflict before the ISOP is up and running.

What if the ISOP says to the Government that instead of spending £35 billion to £40 billion on a new nuclear station at Sizewell C it could much better balance the system by recommending extra energy efficiency measures, battery storage, pumped-storage hydro or a smarter grid, which we keep hearing about in the plan going forward? What if the ISOP says that we should upgrade the grid urgently between Scotland and England, which would help to better balance the system and deploy renewables better, and get rid of the £4.6 billion in constraint payments that National Grid ESO paid last year to turn windfarms off because there was not sufficient grid capacity? How do the Government deal with the recommendations of the ISOP? Some of the suggestions that I have outlined would meet the aims outlined in clauses 121 and 122 and in the explanatory notes.

We are still to come to clause 131, but in this context it puts a duty on the ISOP to monitor and review developments, including technological changes and Government policies. It seems to me that the Government can make policies that undermine the ISOP’s recommendations; then the ISOP has the responsibility to review Government policy and start all over again. That does not seem very efficient, so the Minister needs to give a bit more clarity on that.

Clause 123 is on the strategy and policy statement, which is long overdue from the Government. On 30 March, in answer to a written question that I submitted, I was advised:

“The Government has consulted Scottish and Welsh Ministers on a draft SPS and taken their comments into account. The Government intends to publicly consult on an updated draft soon.”

When will we get that draft, given that clause 123 reiterates the responsibility of the Government to provide that strategy and policy statement?

[Andrew Bowie]

I thank the hon. Gentleman for his questions. There is not a conflict of interest between the ISOP and Government policy. The ISOP will not be solely, or even primarily, responsible for delivering net zero. That is the responsibility of the Secretary of State and the Department for Energy Security and Net Zero—or any future iteration of it. Delivering on the net zero targets will require a comprehensive approach across a range of policy areas, and the ultimate responsibility will lie with Ministers across Government. However, their decisions will be informed by information and analysis from the ISOP, and the ISOP’s own decisions will make a contribution—for example, in areas such as electricity and gas network design, or the development of new balancing or ancillary services. I know the hon. Gentleman agrees that net zero is a whole-economy project.

In answer to the hon. Gentleman’s question about how the ISOP will be held accountable, the ISOP will be a limited company, and the Secretary of State is the sole shareholder, holding ultimate responsibility for the effective corporate governance of the organisation. The Secretary of State will appoint the chair of the board, who will be responsible for leading the strategic direction of the ISOP.

The hon. Gentleman asked why it was decided not to extend the advisory role to the devolved authorities, and about the strategy and policy statement. The Bill relates to energy, which is a reserved matter, as he knows. We therefore consider that going beyond UK Government and Ofgem for a statutory duty to provide advice would create an undue burden on the new ISOP. Any costs to the provision of advice will fall on bill payers across Great Britain; the provision of advice should be focused on achieving benefit for all GB bill payers. As the hon. Gentleman knows, we are upgrading the grid between Scotland and England; it is a priority of this Government to upgrade the grid across the entire United Kingdom. In answer to his last question, the strategy and policy statement is forthcoming soon.

Question put and agreed to.

Clause 121 accordingly ordered to stand part of the Bill.

Clauses 122 and 123 ordered to stand part of the Bill.

Clause 124

Licensing of electricity system operator activity

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