Electricity Supplier Payments (Amendment) Regulations 2021

Lord Bourne of Aberystwyth Excerpts

Tuesday 23rd February 2021 Lords Chamber

[Lord Bourne of Aberystwyth (Con) [V]]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Bowles of Berkhamsted, and I was intending to raise many of the issues she has just raised. I will still raise them, but it may now take me less time to do so. She has really put her finger on the concerns relating to the switch from the three-year basis to the one-year basis and some of the thinking behind this. I thank my noble friend for setting out the effects of these regulations very clearly and for what he said about the capacity auction—I will come back to that later, if I may.

These regulations relate to the contracts for difference schemes, which, quite rightly, encourage low-carbon electricity generation, and to the capacity market, which helps ensure security of supply. These are clearly central to government policy, which I am sure is supported in principle across the House.

The levy for the contracts for difference counterparty was previously first assessed on an annual basis. It then went to a three-year process, where the levy was fixed for three years in advance. We are now returning to a one-year basis because of the significant drop in demand for electricity in the last year. I understand all of that and support the regulations, but I am wondering what thinking there is about whether there will be a reversion to a three-year basis. I think these regulations will continue until they are superseded, so the basis will be the same. It would be interesting to hear if the Government have given any thought in the medium or long term to a return to a three-year basis, particularly in light of the Prime Minister’s road map outlined yesterday?

Clearly, this is central to the way we approach the whole issue of energy security and indeed green energy going forward, and the drive to net zero. Like the noble Baroness, I wonder what the thinking is about what happens once the pandemic ends or we come largely out of it, and whether there will be a long-term difference in the way that energy needs to be supplied. Will there be a switch to more people working from home—I am sure there will—what will be the effect of that and of people presumably not going to restaurants on the way to work for breakfast, and so forth? What will be the effect of a change from one type of transport to another? Clearly, all this needs to be considered and factored in. On a broader front—I appreciate that this is well beyond the immediate scope of these regulations—what thinking have the Government given to this issue? If my noble friend does not have the details, I would be very happy for him to write to me.

I thank my noble friend for what he said about the capacity auction, which I understand from him today is to be in March of this year. I do not know whether he has a precise date; that would be interesting to hear. I welcome too what he said about the increased ambition and the technologies it embraces.

In conclusion, on a broader front—as I say, I certainly support the regulations—in view of COP 26 in Glasgow in November and the accelerated action towards the goals of the Paris agreement and the UN Framework Convention on Climate Change, which I certainly welcome, will Her Majesty’s Government commit more resources to this vital international endeavour? The Government have done much and I know that my right honourable friend the Prime Minister is personally committed to this, but with the welcome arrival of President Biden and indeed of John Kerry as special envoy on climate, what bilateral discussions are we having with the USA and what future resources are we committing to net zero? As I say, if my noble friend does not have details, I will be very happy to learn about them in writing.