---

Energy Bill

The noble Lord is right. He will forgive me if I do not try to reply to the debate by listing the potential benefits that the Government have analysed so far. Without figures that would be meaningless. Any lists that I provide to the Committee would not be exhaustive, such are the fertile minds of a number of noble Lords. I am bound to be open to that challenge. I merely say to the noble Lord that surely he can recognise that with the magnitude of necessary investment regarding the domestic rollout, the Government have to ensure that their cost-benefit analysis on the potential product is as adequate as possible, given all the uncertainties involved. We have initiatives which are helping us. The Energy Demand Research Project will complete its work in November of this year. We would not conceive of being able to reach a decision on these issues until that report has been considered. I owe both noble Lords the courtesy of addressing their specific amendments. There was bound to be a contextual debate about this very difficult issue. I hope that I have clarified some of those issues, while indicating that the Government are considering these matters as the Committee in broad terms suggests, although the amendments are rather more ambitious and contain dimensions which I am not prepared to accept. Amendment No. 68 seeks to ensure that licence modifications must take effect within a 10-year period of the Act being passed. Amendment No. 69 seeks to specify a 12-month period within which regulations must be made and to ensure that a domestic rollout of smart meters takes place over 10 years. As I have indicated in my earlier remarks, I am not unsympathetic—far from it—to the objectives. The Government share the broad proposition that, if we can introduce smart meters, there are potentially considerable gains. We have a large programme of work under way to examine exactly the kinds of issues raised by the amendments. I hope that the Committee will agree that we cannot proceed on just the belief that the benefits are bound to outweigh the costs. We must have more than just a belief; we must make this decision based on real evidence. The Government have taken steps, are taking steps and will have at their disposal later this year a vast amount of the necessary evidence enabling us to take the decision. I do not see that our approach is unsupportive of smart metering—quite the opposite. The best way of delivering certainty to business, as several Members of the Committee have emphasised, is that business needs to know what government strategy is to plan the necessary investment and to meet the demands of the community. The best way to deliver certainty to business would be to take decisions on our policy and the detail of a smart meter rollout against the backdrop of a thorough analysis of the costs and benefits. We are not in that position yet. The clauses are consistent with the approach that, of course, we are looking seriously at the potential benefits of smart metering, but details such as the timescale of a rollout will be set out in modified licensed conditions or other industry documents rather than on the face of the Bill, which surely would be premature. Technical issues in the energy sector are not new. Generally, it is the case that we do not put technical factors in the legislation. We recognise their complexity and it is the responsibility of Government to work their way through those issues. The advantage of not having it in primary legislation is that we have a degree of flexibility to decide the details of a rollout and implement the licensing and other arrangements in this regulatory area after we have taken final decisions and had an opportunity to identify the optimum, most cost-effective manner of rollout. Secondly, although we have completed a very considerable amount of work on domestic rollout, it has raised a number of very real issues which require detailed analysis. That is why I hope that the Committee will recognise that it would not be right to specify issues on the face of the Bill. We need to look comprehensively at the three key parameters of the project, which are meter functionality, the speed at which rollout occurs and the model of rollout. Each has very significant implications for the overall costs and benefits of any rollout. As I have indicated to the Committee, the sums involved are very substantial indeed. It would be highly damaging in the long term if a premature decision were taken now to set one of these parameters in primary legislation before we fully understand the subsequent implications that that may have on the other parameters concerned. For example, the implication on the overall cost of fixing the parameters, such as timeframe, now, could deliver benefits—I recognise the benefits from immediate action—but it is quite possible that those benefits will be far outweighed by the overall costs of the project. The clauses in the Bill set out to indicate that we will be able to act as quickly as possible to roll out smart meters to the small business and domestic sector once and if our final analysis supports that. If we proceed with domestic rollout, the detail, such as timetable and meter function, will be set out in the draft licence conditions. The powers in the Bill will ensure that there is further parliamentary scrutiny of the draft licence conditions, so the Government will be answerable in that respect. I want to put on the record the fact that the clauses enable the modification of licence conditions. Amendment No. 69 refers to regulations which, in its current form, neither the existing power nor that amendment would allow. That is why I cannot accept the amendment. I hope have made it clear that the important issues raised within it are the types of issues we are examining now in the context of reaching—I reinforce this point to the Committee—final decisions later this year. Noble Lords are anxious that the Government should be committed to a timeframe. That is what we are doing. There will be a decision with regard to medium-sized businesses. We are looking at the issue of small businesses. The domestic position requires further work, and the Committee will recognise what an immense task that is and why the Government have to get it right.