Energy Generation (Planning and Right to Invest)

Gareth Thomas Excerpts

Tuesday 6th March 2012 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move,

That leave be given to bring in a Bill to require new energy generation companies to offer a proportion of shares for purchase by residents in local communities; to provide that residents in local communities have the right to invest in ownership of local electricity distribution grids; to establish an agency called Community Power Direct to advise local communities on matters relating to energy generation; to require local planning authorities to consult Community Power Direct when considering planning applications involving energy generation; and for connected purposes.

My Bill seeks to keep within local communities more of the wealth and power that our need for energy creates. The motivation behind the Bill is to make communities more resilient by helping to keep a little more of the wealth from energy generation in local hands. Being a child of the 1980s, I remember the “Tell Sid” campaign advertising new energy company shares for sale to ordinary people for the first time. I believe in share ownership, and I want more people to have a share in the electricity market, with one crucial innovation: we need a new “Tell Sid” campaign. My Bill would encourage those new electricity share owners to co-operate and pool their influence. Widening the pool of people who have a direct stake in the ownership of how new energy is generated would be good for the country, for communities, and for the energy market. My Bill would give a shot in the arm to the ambition for more co-operatives and mutual methods for delivering services.

Some community-scale energy schemes are already wholly community-owned, funded by community share schemes such as Westmill in Oxfordshire, Fenland Green Power, and the famous Baywind Energy in the Lake District. Of course, I support those who want their energy to come from a wholly self-generated or community-generated source. My Bill seeks to lock into law the ability of the local community to buy into the ownership or part ownership of energy that is being generated in and from their area. The Bill would create a right for local people to invest in the new energy companies that are created whenever new energy generation projects are developed.

To secure a licence and to raise the finance for generation schemes, the energy companies would establish new, separate wholly-owned companies. The Bill would require shares in those new companies to be made available to local people wanting to invest in new energy generation projects in their area. For example, why should not local people who are seeing a new wind farm go up have the chance to get a direct personal benefit from a new business which, important as it is for bringing down carbon dioxide emissions, will nevertheless inevitably have some impact on their community? Why should local people not have a say, through their ownership of a stake in the new business, in how it is run? Why should local people, whose ever-rising energy bills have helped to pay for the new energy business, not see a direct financial return too? That could help the finances of people in the local community and make them feel more secure.

I believe in the power of markets and the benefits of strong competition, but markets have to be regulated properly if the benefits of competition are not to be captured by the few. My Bill therefore seeks to spread the benefits from new investment in energy markets to the many. The squeeze on finances up and down the country, which has been caused by the Government’s economic policies, is exemplified in part by Ministers’ failure to tackle rising energy prices. I support the need for action on rising prices, which my right hon. Friends the Leader of the Opposition and the shadow Secretary of State for Energy and Climate Change have rightly championed. My Bill would help to increase the number of winners from the energy market. It would also accelerate the slow process of decentralising the generation and supply of energy, which bolder Governments than ours are embracing with enthusiasm.

Communities should have the opportunity to own the electricity grid in their area. That means not the electricity transmission wires, but the electricity distribution network beneath the grid supply point. My Bill would give a right of first refusal to local communities to allow them to buy the local grid if it is put up for sale. It would create a period in which the community could consider whether to buy or partly buy the grid network in their area. In the meantime, new infill grid infrastructure —the local wires that connect new homes on new estates to the grid—would in future be community owned and operated under licence, perhaps by the National Grid or another body. Ofgem would be required to license the process.

One lesson from the financial crisis and the various privatisations of the ’80s and ’90s is that individual shareholders are not powerful enough on their own. My Bill would therefore establish Community Power Direct to enable those in a community who buy shares in a new energy generation project to pool their shares through a co-operative so that they have a more effective voice in how the business operates and who benefits from its success.

Similar ownership and control structures are emerging in services other than energy, such as health care, leisure services and financial services. Foundation hospitals allow local people to become direct members of their hospital, giving them a voice and even more of a stake in the delivery of a service that is vital to their community. Building societies and credit unions give users of financial services a stake in their ownership, giving them a voice in and, crucially, a financial benefit from how the business is run. Why can a similar process not operate for energy generation?

Community Power Direct would have to be consulted when new energy generation projects are planned or developed. That important new planning requirement would be a further stimulus to widening the opportunity for local people to invest in the energy services of the future.

My Bill would help communities to become a little more resilient in these tough times. It would stimulate new social investment and share more fairly the benefits of energy wealth. I commend it to the House.

Question put and agreed to.

Ordered,

That Mr Gareth Thomas, Gavin Shuker, Barry Gardiner, Ms Karen Buck, Clive Efford, Kate Green, Chris Evans, Stella Creasy, Alun Michael, Mr Andrew Love, Rushanara Ali and John Cryer present the Bill.

Mr Gareth Thomas accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 27 April , and to be printed (Bill 315).