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Energy Bill

My Lords, I feel there is an inevitability about this intervention in that I feel a job description has been created before my very eyes. I acknowledge the excellent contribution of the noble Lord, Lord Oxburgh. I agree with noble Lords opposite that it comprised a splendid description of the challenges that we face. I also acknowledge the kind remarks made on all sides of the House that the amendments do not constitute a criticism of the actions that Ofgem has taken as an organisation, but rather, as the noble Lord, Lord Redesdale, commented when moving an earlier amendment, that any concerns relate to the terms of reference within which the authority has to work. That is an important point in respect to my remarks, which are not defensive. That point was later reinforced by the noble Lord, Lord Jenkin, with his customary elegance of descriptive language, when he compared concerns about Ofgem’s duties to a Christmas tree, topped by a clear bright fairy, with all sorts of baubles of different and often disjointed legislation. He explained that the purpose of his proposals was to stop the Christmas tree collapsing under its over-decorated weight. As chairman of the authority, I should make it clear that I am not the clear bright fairy at the top of the tree. I underline that it is both the authority’s and my own view that it is for Parliament and the Government to establish the statutory duties under which we operate; hence the debate is very interesting and one in which I want to take part. However, I shall not vote on the measure because I feel that my function today is to explain how I view the matter and to respond to the questions that have been asked. The amendment of the noble Lord, Lord Oxburgh, seeks to amend the Electricity and Gas Acts to include references to ““existing or future”” consumers. This emphasises the importance of thinking not only of the present but of the future. I greatly admire the noble Lord, Lord Jenkin, but unfortunately I have more problems with his amendments. I value the fact that he will not move the last of his amendments, which would fundamentally undermine through direction the independence of the regulator. However, his earlier amendment, Amendment No. 30, has echoes of that and problems remain. We share a sense of urgency; indeed, the intervention of the noble Lord, Lord Whitty, disappointed me, because he will be well aware of some of the efforts that have been made in the past few years to raise climate change and fuel poverty up the agenda. That is consistent with our obligation and economic duty to consumers. We can discuss that at another time and in another place. Amendment No. 31, as the noble Lord, Lord Jenkin, said, involves a procedural issue which, if Amendment No. 30 were accepted, there would be merit in pursuing. I must examine Amendment No. 30 to underline, in answer to earlier questions, why I have concerns. Subsection (1) places the Secretary of State under an obligation to issue guidance to the authority in the exercise of its functions under legislation. The nature of the guidance is set out in subsection (3), which has interesting wording that goes to the heart of the issue. The guidance, "““must, in particular, be given with a view to the desirability of ensuring that the functions of the Gas and Electricity Markets Authority are exercised in a manner most likely to contribute to””," security of supply and—these are interesting words— "““the mitigation of or adaptation to the consequences of climate change””." There is a risk of introducing uncertainty about how the Secretary of State will issue that guidance and how it will fit in with the principal duty to consumers. In the words, "““desirability of ensuring that the functions … in a manner most likely to contribute to””," there is no consideration of the cost to consumers and no indication that this needs to be achieved efficiently. These are particular concerns to an economic regulator for which, as earlier debates have shown, there is a clear wish to maintain its economic duty.