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Energy Bill

I will do my best to answer my noble friend’s legitimate questions on this important clause, which, if carried, will allow the Government to make important changes to the existing renewables obligations based on electricity suppliers in Great Britain. We wish to make some significant changes, and it is on those that my noble friend is pressing me. Where I fail to answer his questions satisfactorily, we will write to him. I start with the question of whether the Scots, English and Northern Irish ROCs are intertradable. That is the case at the moment, and it is our intention that it should remain so. My noble friend asked whether the Section 63 order can be made by a Scottish Parliament without UK parliamentary approval. The answer is no. The Section 63 order to transfer functions from the Bill to the Scottish Parliament must be agreed by both Westminster Parliament and the Scottish Parliament before it can take effect. There is a hold on it, and it is not merely at the whim of the Scottish Parliament. He asked whether carry-back and carry-forward are permitted under the existing RO. The RO order allows suppliers to bank ROCs from one year to next. However, criteria are applied to banking. First, a supplier can bank only 25 per cent of its obligation. Secondly, banked ROCs must be presented the following year or they will no longer be valid, so they can be banked for a maximum of a year. He invited me to answer what principle will determine the buyout price for the RO. I remind him that the buyout price was set at £30 on introduction of the RO six years ago in 2002, and has been linked to the retail price index. It is our intention—this is the answer to his question—that the link to the RPI will be maintained. My noble friend moved on to ask me some questions about the relationship between the buyout price under the RO and the CRC and how these compare with the EU ETS carbon price. I am advised that the answer is quite complicated. With, I hope, his leave and that of the Committee, I will write to him about it and all Members of the Committee will be informed. That also goes for his question about ROCs and CRCs being intertradable and, if not, why not. What are the criteria for the allocation of money collected under RO buyout payments? The money collected in the buyout fund is redistributed to suppliers who have presented renewable obligation certificates in proportion to the number of ROCs they have presented to Ofgem. For example, in 2006-07, suppliers received a payment of £16.04 for each ROC. I will write with the specific figure of what percentage of the obligation is currently bought out. A percentage of the obligation will always be met through buyout payments because, as I am sure that my noble friend knows better than me, those payments are recycled to suppliers who present ROCs. The level of the RO is deliberately set above the level of actual generation to ensure that the recycling arrangements continue to provide an incentive for suppliers to buy the ROCs. Finally, I was asked why new Section 32A(4) is in the Bill. It is similar to provisions in Section 32(3) of the Electricity Act as, currently, we intend to have an order that applies to electricity suppliers in England and Wales but envisage that the obligation can be discharged by presenting ROCs in respect of electricity supplied anywhere in United Kingdom. I am sure that those are not satisfactory answers in full to my noble friend, but I hope that they will suffice for the moment. On anything that has been left out from the questions that we have asked, we will write to him and distribute the letter.