Energy Price Freeze
Debate between Charles Hendry and David Morris(11 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Charles Hendry
I will not get involved in the private discussion between the Labour party and the Scottish National party, which seems to be creeping into this debate, but it is a matter of regret that new nuclear power plant will not be built in Scotland as well as England.
Without the necessary investment, we will see not the lights going out, as people sometimes say, but brown-outs, where major energy users are asked to come off line for a period, and a price spike, which will have very damaging consequences for businesses and consumers. We need huge investment, therefore, in a range of different sectors. As part of the solution, we need to reform the market to bring in more investment than we have seen for many years. The situation was bad under the last Labour Government, but it goes back much further. Although we recognise the need for others to enter the market, I am disturbed by part of this debate, because we cannot secure such investment without the big six. We need the big six alongside other players in the market, and were we to drive them away, it would be much more difficult to deliver the necessary security of supply.
Market reform is part of the process, but until recently, so has been political consensus. When the right hon. Lady reflects on her speech today, I hope she will consider its impact in the boardrooms in Spain, Germany, France and elsewhere around the world. They will be saying, “Is this a party that welcomes our involvement and future investment in the UK?” I can assure her that she is introducing a degree of political risk, making it more difficult to secure the investment we need if we are to deliver the affordability we want.
David Morris (Morecambe and Lunesdale) (Con)
Is my hon. Friend aware that when the Leader of the Opposition announced the price freeze, £1 billion was wiped off the energy stock market overnight?
Charles Hendry
That did happen, but it is actually worse than that, because to deliver the £100 billion-plus we need invested in our low-carbon sector, the companies investing need to borrow money, and the greater the political risk, the higher the interest on that borrowing. If the cost of borrowing increases by even 1%, the result will be a dead-weight cost of £1 billion a year on consumers’ energy bills—just to pay for Labour’s political risk.
National Policy Statements
Debate between Charles Hendry and David Morris
Charles Hendry
One of the issues for investors in this area is certainty. They want to be able to plan for the long term and to know what rate of support they will get under whatever mechanism is in place. A date of 2013 enables people to plan a transition to whatever the banded level will be after that. I understand the need for early clarity, and if there are ways we can provide that, we shall seek to do so. We seek to work constructively because we understand that the alternative can be a hiatus in investment, with investment dropping off for a period of years in advance of the threshold and the level of support changing. It is important, in terms of national interest, to have a continuous flow of investment.
I turn now to the issues that have been covered in the energy national policy statements. Perhaps it would be helpful if I briefly set out the purpose of the documents before us today. The revised draft energy national policy statements consist of a suite of six national policy statements and a number of associated documents. They are not intended to set out new energy policy. They are consistent with and explain current energy policy and how it relates to the planning consent process. Similarly, we are not using national policy statements to change the standard for consenting projects. They neither raise nor lower the bar on how a major energy infrastructure project is examined and consented. They are there to explain how such decisions should be made. They set out the consenting policies that need to be considered in the examination of major energy infrastructure and the decision on whether to grant or decline consent. At the same time, they will ensure that new major energy infrastructure projects respect the principles of sustainable development. They will allow not only the Infrastructure Planning Commission but developers and local residents to see the basis on which applications must be considered.
There is an overarching energy national policy statement that sets out the Government’s policy on energy and energy infrastructure development; an energy need statement on the need for new nationally significant energy infrastructure projects; the assessment principles that need to be taken into account in examining and deciding on proposals for energy infrastructure development; and generic impacts for all energy infrastructure, and how they should be assessed and mitigated to ensure that the right balance is reached between securing our energy needs and protecting the environment.
There are also five technology-specific energy national policy statements, covering fossil fuel electricity generation; renewable energy infrastructure, which deals with onshore wind, offshore wind and energy from biomass and/or waste; gas supply infrastructure and gas and oil pipelines; electricity networks infrastructure; and nuclear power generation.
David Morris (Morecambe and Lunesdale) (Con)
We know that we are legally required to reduce carbon emissions by about 80% in the next 40 years. Can we fulfil that requirement, given that of the 59 GW of new capacity required in the next 25 years, 33 GW of which is needed from renewables, we have only 2 GW currently under construction? The other 26 GW that is needed will, presumably, come from low-carbon nuclear. The Government have made enormous progress in this area—I acknowledge that—but would there be more scope to look at nuclear if we, for whatever reason, did not hit those targets?
Charles Hendry
I pay tribute to the work that my hon. Friend has done as an ardent supporter of the Heysham plant in his constituency and of the case for a new plant in that area. The role for nuclear has been set out clearly in the national policy statements. We believe that it has a fundamental role, but we also have to be realistic about what is achievable. We have identified sites that could be used for 16 GW of new nuclear power, but that is as much as the energy companies believe can be constructed over the next 15 years, which is the time scale that the national policy statements cover. That is not necessarily the end of the ambition, but it looks like what is achievable and realisable over those 15 years. There is no doubt about the Government’s ambition in terms of new nuclear.
Oral Answers to Questions
Debate between Charles Hendry and David Morris
David Morris (Morecambe and Lunesdale) (Con)
Following on from the question by my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke), may I ask the Minister whether any steps are being taken to look into evening out the tariffs for electricity usage by card meter payments and by billing? I believe that there is a differential, so are there any plans to sort that out and make it easier for everyone to pay the same tariff, purely and simply because that would lead to energy conservation?
Charles Hendry
We have been very concerned indeed about the relatively higher tariffs that people on prepayment meters pay for the electricity and gas that they use. Addressing that will be one of the most significant gains of smart metering. If we look at the experience of Northern Ireland, where smart meters have already been largely rolled out, we see that people on prepayment meters pay less than people on standard tariffs. That is the sort of gain that we want to achieve for people right across the United Kingdom.