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Electricity (Single Wholesale Market) (Northern Ireland) Order 2007

rose to move, That the Grand Committee do report to the House that it has considered the Electricity (Single Wholesale Market) (Northern Ireland) Order 2007. The noble Lord said: The draft order was laid before the House on 19 February. It will enable the establishment and operation of a single wholesale electricity market. I emphasise that; the order does not relate to the retail market, but to the wholesale electricity market covering Northern Ireland and the Republic of Ireland. The single electricity market is a key building block in the development of a sustainable all-island energy market covering electricity and gas. The aim is to enhance the mutual economic and social benefits, including security of supply, from cross-border co-operation on energy matters. Development of an all-island energy market has been a strategic policy objective since the time of the first Northern Ireland Assembly. I understand the initial work started in 1999, and that led to the signing of an all-island energy market development framework in 2004 and action to put in place the flagship element of this work, namely the creation of the single electricity market. The draft order itself is made under the Northern Ireland (Miscellaneous Provisions) Act 2006, and the Northern Ireland Act 2000. We welcome the constructive comments and common-sense approach to co-operation with the Republic of Ireland on the single electricity market that were made during the debate on the 2006 Act in June last year. The proposal to legislate for reform of the existing wholesale markets in Northern Ireland and the Republic are set out in a Memorandum of Understanding between the UK Government and the Government of the Republic. Similar legislation has been introduced into the Irish Parliament. The principal objective of both pieces of legislation is to protect the interests of consumers. The single electricity market will bring together two small isolated markets to form a larger, more competitive marketplace. Along with improvements to both north-south and east-west electricity interconnection, the market is a sensible and practical first step towards longer-term British Isles co-operation within the wider UK/Ireland/France electricity market. The new market is set firmly in the context of the European Union’s internal market for electricity and natural gas and the growing regionalisation of national markets. The project itself has been led and managed by the two regulatory authorities, the Northern Ireland Authority for Energy Regulation and the Commission for Energy Regulation in the Republic. They have worked closely together and with the industry to deliver the new market on time. It is an incredibly complex project, and they deserve support and commendation for their work. The two regulators, in addition to their existing domestic duties, will be responsible for development and governance of the single electricity market. This will include common trading arrangements and licensing of market participants. Day-to-day trading will be managed by a market operator. This is being established by the two transmission system operators as a contractual joint venture. The need to secure mutual benefits from the market was raised during consultation on the draft order. It is vital that consumers are the beneficiaries of the new market. Their interests have been paramount in the work done by the two governments and the two regulators. The Memorandum of Understanding and the draft order make it clear that the new single electricity market should be a competitive market where there is effective rivalry between generating companies. We believe that this is in the best interests of consumers. Maria Eagle MP, as Northern Ireland Energy Minister, has worked closely with the Irish Energy Minister, Noel Dempsey, to ensure that the necessary action is taken to deliver competition to the new market. They agreed that measures must be taken to tackle dominance and transparency in both the Northern Ireland and the southern markets. The measures to address ESB’s dominance proposed by the Irish Government in their White Paper on energy published earlier this week are supported by the Northern Ireland Authority for Energy Regulation. The Northern Ireland direct rule Minister and I welcome the Irish Government’s commitment to opening up competition to their generation sector. It presents business opportunities for UK and Northern Ireland-based companies. But we must be realistic about how much competition can be delivered. The all-island market is still very small compared with European Union markets. While the market will cover a large geographical area, it will only be the size of Greater Manchester in terms of output and customers. It is vital to consumers who want the lights on when they turn a switch, but it is a very small and highly complex market which needs looking after as well as the introduction of competition. This short technical order of 12 articles and4 related schedules covers the provisions needed to get the market up and running. It was amended following the consultation exercise, but it was not possible to take on board all the proposals that were made. For example, the order was amended to cover best regulatory practice but it was not possible to include provision for a separate appeals mechanism to deal with licence modifications at this stage. This issue will, however, be considered further in light of discussions with interested parties on the existing arrangements for the single electricity market. Articles 3, 4 and 5 of the draft order make provisions for the department or the regulatory authority to modify the conditions of licences for the generation, transmission or supply of electricity in connection with the single electricity market; the introduction of a licensing regime in respect of the function of the market operator of the market; and property arrangements schemes to facilitate the transfer of property, rights and obligations between the owner and operator of a transmission system to implement the single electricity market. Articles 6 to 8 provide for the establishment of a special committee of the authority, to be known as the Single Electricity Market Committee—the SEM committee. It will take any decision regarding the exercise of certain functions of the authority where it considers that such functions materially affect or are likely materially to affect the single electricity market. Articles 9 and 10 provide for single electricity market-related duties for the department, the authority and the SEM committee when carrying out their functions in relation to the single electricity market. Articles 11 and 12 clarify the effect of the draft order on certain arrangements between licence holders and provide for certain minor and consequential amendments. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Electricity (Single Wholesale Market) (Northern Ireland)Order 2007.—(Lord Rooker.)