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Energy Bill

I cannot give a direct answer, except to say that it would be surprising to make my contribution in the openness of this Committee if the Government had anything to hide with regard to these figures. I hope that I will be able to answer the noble Lord's question. I am struggling with where the figures are published. It appears that they are published in Energy Markets Outlook, so the document to which I referred contains that information. I apologise to the noble Lord that I could not answer him as directly as I wanted to. The key part of the Government's role is to ensure that the regulatory framework is fair and fit for purpose so that projects do not face unnecessary obstacles and delays. That, as I indicated earlier, relates to the Planning Bill, which we will consider in this House in the not-too-distant future. In the Energy Bill, too, we have proposals for a new licensing regime that will enable offshore gas storage and importation projects to be built in the future. An important part of this Bill and its correlation with planning in those terms is to ensure that we increase storage and importation capacities. The Bill does not deal directly with onshore gas storage, as the amendment seeks to do. I have it in mind that a number of the amendments seem to seek to add to the Bill rather than to amend it. In no way, shape or form am I expressing any reservation about that strategy; I am all too well aware of the fertile sources of ideas in both opposition parties and among Back-Benchers, but this is another amendment that seeks to add to the Bill rather than to amend it. The provisions for modernising and reforming the planning consents are already being catered for, as I have indicated. The Government and Ofgem have established a number of mechanisms that also help to ensure that the market is well prepared to meet the demand for gas. Transparent, credible information is essential if markets are to function effectively, and energy suppliers need to be able to anticipate changes in energy needs sufficiently far in advance to provide the necessary supply capacity and delivery infrastructure. That is the purpose of Energy Markets Outlook. It is published by the department annually and therefore goes some way to meeting an aspect of the amendment that deals with the publication of information. It is certainly intended to provide information and analysis of future trends to help potential investors and others with an interest in the UK energy market to form a comprehensive overview of the likely development of the supply-demand balance in energy over the next decade or so. In addition, shippers and suppliers that fail to provide enough gas to deliver their contracts on a daily basis must pay an imbalance charge or cash out price—in effect a high market price, exposing themselves to potentially high costs, such as in the winter of 2006 where the closing spot price rose to £1.65 per therm, which was 2.5 times the average closing price for that winter. The licensing conditions and network codes, implemented by Ofgem provide incentives on suppliers to ensure availability of supplies to domestic customers, even in the event of severe conditions. Of course, I heard what the noble Lord, Lord Redesdale, had to say about the problems of physical supply and the fact that, obviously, storage will be necessary on greater levels than in the past, when we could call upon natural storage—namely, the ability to pipe gas from the North Sea, from its reservoirs there. We obviously have a massive change in perspective on our energy provision in those terms. However, Ofgem's work is to guarantee that there are incentives to suppliers to provide adequate supplies of gas and to penalise where people fall short of contract. Together, these measures from Ofgem provide a strong financial incentive for gas shippers to acquire a portfolio of contracts and assets, which will enable them to provide a sufficient, flexible and competitively priced source of gas when needed, even when demand is high—for example due to cold weather. The grid operates storage monitors, which are a tool to ensure that there is enough gas in storage, across all storage sites in the UK to underpin the safe operation of the gas transportation system in a severe winter. These monitors act to protect the gas supply of domestic customers and those whose gas supply cannot be safely interrupted. I am aware that I have not answered all detailed questions at this stage and that there will be many opportunities as the Bill develops to flesh out a number of these arguments. This is a constructive amendment from the noble Baroness—it is a proposal designed to guarantee the increased security of supply. I hope that she will appreciate that the Government have a different strategy from that envisaged in the amendment, while at the same time sharing the broad objectives of two things that the amendment considers: first, security of supply and, secondly, the necessity of adequate information, so that there can be market responses that meet the nation's needs. I hope that within that framework my noble friend Lord Woolmer will also feel that I have answered his point on the Government's broad strategy and that the noble Baroness will withdraw her amendment.