---

Energy Bill

moved Amendment No. 46: 46: Clause 53, page 46, line 43, at end insert— ““( ) In this section ““security”” includes— (a) a charge over a bank account or any other asset; (b) a deposit of money; (c) a performance bond or guarantee; (d) an insurance policy; (e) a letter of credit.”” The noble Lord said: I shall speak also to government Amendments Nos. 50 and 52. They have been grouped as they all relate to the definition of security for decommissioning nuclear power stations, offshore renewable energy installations and offshore oil and gas installations and the protection of that security in the event of insolvency. Clauses 53, 67 and 71 respectively aim to ensure that moneys set aside for decommissioning by way of security cannot be accessed by creditors in the event of a company becoming insolvent. The provisions do that by disapplying the relevant insolvency legislation. That ensures that moneys set aside for decommissioning will be restricted or prevented from being used for anything other than their intended purpose of fulfilling decommissioning objectives and obligations, even if the company with those objectives and obligations becomes insolvent. If we did not have those provisions and a company with decommissioning obligations became insolvent, it might be possible for creditors to access moneys set aside for decommissioning. That could mean that insufficient moneys remained to pay for the full cost of decommissioning and, in the case of new nuclear, the operator’s full share of waste management costs. The amendments clarify the meaning of the term ““security”” as used in relation to those provisions. To take each amendment in turn, Amendment No. 46 relates to the decommissioning and clean-up of new nuclear sites. As Clause 53 is drafted, there is a risk that if an operator was to become insolvent the courts could construe the term ““security”” by reference to the narrow legal nature of any arrangements in place, rather than their broader economic effect. For example, if a performance bond was provided as security for decommissioning funds, a court might determine that this would not amount to a security, and therefore in the event of insolvency the bond could be accessed for creditors for purposes other than decommissioning. In such a situation there would be a high risk that the taxpayer would have to meet any resultant shortfall in decommissioning funds. That could put funds set aside for decommissioning at risk as they would not then fall within the protection from insolvency provided by in the clause. Through amendment, the Government want to ensure that operators have access to a full range of instruments which, if acceptable to the Secretary of State, might be put forward as part of the programme. That could include instruments that do not yet exist but might be developed as the market matures. Amendment No. 50 amends the offshore renewables provisions in Clause 67. Like Clause 53 for nuclear, Clause 67 provides protection against insolvency. The Energy Act 2004 defines security in relation to decommissioning programmes for renewable energy installations. This amendment amends the definition given in the Energy Act 2004 to include an insurance policy within that definition. This brings the definition of security in offshore renewables into line with the regimes for nuclear and oil and gas, and ensures a consistent regime. Amendment No. 52 relates to oil and gas installations. It replicates the previous nuclear amendment so that insolvency protection under Clause 71 has a consistent definition of security. I hope that the Committee acknowledges the importance of ensuring that funds set aside for decommissioning are available for the purpose for which they are set aside, even in the event of a company becoming insolvent. We also hope that it is accepted that these amendments should be supported, because they strengthen the protections for the taxpayer by providing greater clarity to the courts of the definition of a security. The amendments also ensure that we have consistency of protection for decommissioning funds across the three regimes. I beg to move.