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Energy Bill

moved Amendment No. 23: 23: Clause 81, page 74, line 26, after ““including”” insert ““financial and other”” The noble Lord said: My Lords, in speaking to this amendment, I shall speak also to Amendments Nos. 24 and 28. I declare an interest: I am chair of the appeal panel of the Association of Energy Suppliers, although that has no direct bearing on my amendments here. I am an enthusiast for smart meters. I learnt about them some time ago. They would make a significant difference to the consumption and cost of energy for ordinary domestic consumers. They would enable people to use their own energy more efficiently, both gas and electricity, and to use it at the time of day when it was less costly. It is believed that there would therefore be a significant saving to domestic consumers if smart meters were installed. The Government accept that proposition and are keen for smart meters to be proceeded with. There are one or two difficulties, though, and I want to indicate why my amendment will make the transition to smart metering somewhat easier. I have had to learn some technical terms here. In the world of energy metering, the word ““stranding”” is the term given to the cost of replacing a meter before the end of its useful economic life. That is to say, if a meter is taken out and replaced by another meter, that meter will have a value unless it is totally used up, which would not be the case in a transition to smart meters. Currently, when a meter is removed prematurely, it will be returned to its owner, whichever company owns it, and is likely to be reinstalled elsewhere. But if we are moving towards smart meters, these old meters will no longer have a use, which would result in a significant cost in terms of disposing of an asset that would no longer have a value. If we are moving towards smart metering, the timescale would be liable to require an early replacement of a large number of the meters that we now have in our homes, and those meters would have no further value and no further use. There is likely to be a need within the industry to compensate participants for the potential stranding costs that they will face if there is a decision to implement an accelerated rollout of smart metering to domestic premises on a national basis. I hope that such a decision will be made soon; therefore, my amendments are relevant. The understanding is that the existing provisions of the legislation covering electricity are adequate, but there are doubts whether those covering gas are sufficient, and one of the amendments deals with that point. Amendment No. 23 clarifies that the Secretary of State’s powers to modify licences include the power to make provision for appropriate financial arrangements in relation to the problem of the stranded meters to which I have referred. Amendment No. 28 corrects an anomaly in the gas legislation regarding the power of gas transporters to raise a levy through their network user charges. Most of the issues are concerned with transporters which provide the gas straight to our homes. As drafted, Section 7B(5)(b)(ii) of the Gas Act 1986 would provide for compensation for stranding via any such levy to be payable only to gas suppliers or shippers and not to gas transporters, which are the industry parties most likely to be affected by stranding. Accordingly, Amendment No. 28 would remove the relevant restriction from the paragraph in question and put this gas provision on all fours with its counterpart in electricity legislation. It is an anomaly that gas and electricity have not been dealt with equally up to now, and this amendment seeks to deal with that anomaly. Finally, it is unclear whether the Bill as drafted is strong enough to support a rollout of domestic smart metering on a regional franchise basis, should that be the delivery option finally chosen by the Government following assessment and consultations. I appreciate that these decisions have not yet been made and consultations are taking place, but it is a fair bet that one serious option is that domestic smart metering would be rolled out on a regional franchise basis. There is, then, the difficulty of competition law. Amendment No. 24 is intended to ensure that if it were decided to use a regional franchise model, there would be no risk of a challenge for infringement of competition law. The three amendments make the position somewhat clearer and would facilitate the transition to smart meters. I hope that the Government will find them helpful regarding the aim that we all share in moving clearly, and not too slowly, towards installing smart meters in our domestic households. I beg to move.