Electricity Market Reform

Earl Attlee Excerpts

Tuesday 12th July 2011 Lords Chamber

[Lord Marland]

My Lords, I am very grateful to the noble Baroness for her comments. She rightly said that meeting the challenge is very difficult. The previous Government found it very difficult. I am happy to say that we have played our modest part by encouraging six new nuclear power stations, setting out a road map and introducing a series of measures that will regenerate the energy and electricity supply market—which, as I said earlier, has not happened for 20 years. We have inherited a legacy of inactivity. It is a major structural problem; it is not one that we welcome, but we in this Government intend to get our hands on it and deal with it.

I note the noble Baroness’s point about nuclear subsidy. I shall continue to remind her that we have always said there will be no subsidy for nuclear other than that available to wider technologies. The wider technologies obtain a subsidy and nuclear is now part of that.

On the noble Baroness’s comment about bills, it is fair to say that bills have risen and are going to rise. I go to my petrol pump and find it costs me £1.33 to fill my car—no, I am sorry, it costs me £1.33 per litre. That is more than £1.33 to fill the car—it is about £1,033. Bills are rising outside our control because we are reliant on fossil fuels and oil coming from different shores, rather than the wonderful security in which a number of noble Lords, including my noble friend Lord Lawson, were able to bathe—an oil supply from our own sources. When you invest in a new infrastructure which needs £110 billion there will be bill increases on the horizon. Do we want to do this? Of course we do not—we want to keep bills as low as possible and to reduce them—and the plans we have set out will enable us to recover that position and to not see the same exponential rises that we have had of late.

The noble Baroness referred to feed-in tariffs, doubtless with the solar photo voltaic debate that will take place on Thursday in mind. Do we think it right that the Government should prioritise billions of pounds to support an industry which is not necessarily climatically suited to this country? The Government have to make tough decisions; they have to establish value for money for the taxpayer when deciding where to allocate funds to support developing technologies. The current Government, of which I am proud to be part, do not consider that this technology requires the same degree of support. The industry is becoming mature and the cost of equipment is coming down dramatically and we have therefore taken a view on it.

The noble Baroness referred to RWE. I believe that RWE is less certain of its future in its home country than it is here. It has various jurisdictional issues in terms of the future of its own nuclear industry that present it with far-reaching problems beyond our shores.

The Government have committed to the green investment bank and we have allocated funds to it. You cannot just click your fingers and establish a funding bank overnight, but in 12 months we have got to grips with the issue and it is well on the path.

We have consulted on the issue of EPS but we have not changed fundamentally what we set out to do. It is important that we have standards for companies that do not comply with a reduced performance format. That is the long-stop part of regulation which will set a clear regulatory path of where people can perform in energy supply.

Clearly we need to take into consideration the energy-intensive industries and we are consulting with them at the moment. We will announce a package of support for them to encourage them towards lower carbon usage. They are major employers in the country and major international exporters. It is important that we recognise that in any regulation we introduce, and at the end of the year we will announce a package of measures to support that.

I hope that that explanation goes a long way towards answering a number of the excellent points made by the noble Baroness. I have a feeling that there will be some more excellent points in a moment.

[Earl Attlee]

I remind the House of the benefits of short questions in order to allow everyone who wants to get in an opportunity to do so.

--- Later in debate ---

[Lord Reay]

My Lords, this is an extremely important White Paper—

[Earl Attlee]

My Lords, it is the turn of the Labour Benches.

[Lord Boyd of Duncansby]

My Lords, I want to ask one question, relating to the position of the devolved Administrations, particularly Scotland. The renewable obligations are executively devolved to Scotland and that has enabled the Scottish Executive—now the Scottish Government—to shape that as they wish. What role does the noble Lord anticipate that the Scottish Government will be able to play in the new feed-in tariffs with contracts for difference? What will be the relationship between the Scottish Government and the new institutions that he talked about?