Lord Lilley
Main Page: Lord Lilley (Conservative - Life peer)
Amber Rudd
The hon. Gentleman, who is well respected in this area, should identify the difference between taxation and subsidy. The point of my right hon. Friend the Chancellor’s announcement yesterday is that North sea oil is an important part of our industry and employment. We still feel there is more to be done in the extractive industries and we should support them despite the fall in oil prices.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
8. What assessment he has made of the effect on (a) generating capacity and (b) the transmission network of an increased reliance on intermittent energy supplied by renewable sources.
The Minister of State, Department of Energy and Climate Change (Matthew Hancock)
Electricity generation always needs to balance supply and demand. The transmission system clearly has to change to accommodate expanding renewables, and Ofgem’s new framework will help that happen.
Mr Lilley
I note that my right hon. Friend does not give any costs for the extra capacity required for when the wind does not blow or the sun does not shine and the extra transmission lines required to transmit from long distance. Will he confirm that those costs are not included in the £7.6 billion levy control framework, despite the fact that the former power director of the National Grid puts them at £5 billion a year? If they were included, the potential total cost of all the subsidies could be £500 per household per annum.
Matthew Hancock
The levy control framework specifically controls the amount of direct subsidy, but a whole series of changes needs to happen to make sure that our transmission system can keep up with the distribution of energy supply as well as the demand. That includes changes to interconnectors—in other words, getting more of them—and making sure that we have a smarter grid and distribution system. It is difficult at this stage to calculate the cost of those changes.
Mr Davey
We inherited an energy market that was completely broken and a situation where energy bills were complicated and opaque, but we and the independent energy regulator, Ofgem, have acted. We now have simpler bills, fewer tariffs and increased levels of switching, which are helping huge numbers of people. On the specific point the hon. Gentleman raises, Ofgem, in its retail market review, proposed the policy he refers to and is making sure it goes through, but if he has examples suggesting that any suppliers are not delivering on that new regulation, he should bring them to the independent regulator’s attention.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
T6. Does my right hon. Friend agree that the single biggest boost to the British and world economy has been the halving of the oil price, and does it not follow that forcing British industry to use energy that costs twice as much as conventional energy will have a depressive effect on the British economy? Why oh why is he insisting on our moving to wind, which costs twice as much, and this Swansea tidal power, which, according to the Financial Times, will involve a price three times that of conventional fuels for 35 years? Is that not going to depress the British and Welsh economies?
Mr Davey
I have a lot of respect for the right hon. Gentleman, who is known for his intellectual abilities and knowledge, but I am afraid that on this occasion they have failed him, and for this reason: we do not use oil to produce electricity—we haven’t for a long time. His point relates to transport. Oil is a substitute for transport fuels. I think he is talking about gas, but the price of gas has not come down by very much. Moreover, the fall in the price of gas was taken account of in the way we produced the levy control framework, which is the support for low-carbon electricity.