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Energy Bill

My Lords, I have no difficulties with the obligation on the Secretary of State; what follows in the nature of the guidance needs to be addressed. Perhaps parliamentary counsel might have encouraged the use of ““shall””, but I am happy to continue with ““must””. The nature of the guidance is wide and has a potential for being prescriptive. That would be even more the case had the noble Lord, Lord Jenkin, decided to press his amendment on the ability for direction. However, that indicates the thinking behind the amendments. Subsection (4)(a) of Amendment No. 30 mentions, "““any proposals from the Secretary of State””," and ““any … timetable””. It is very broad. I am sure that present Ministers would not do this, but future Ministers could set out prescriptive terms as to what we should do and how we should do it in short order. The circle is completed by the response that the authority ““must have regard”” to the guidelines. The shift from an economic regulator acting independently and making judgments about highly complex issues, as the noble Lord, Lord Oxburgh, indicated, would be severely restricted. The whole tenor of these amendments, whatever is intended, is in principle to indicate control, limitation and management of the authority. It would represent a radical departure from the present independence of the regulator. The effect of the new powers would be significant, whether they were used or not. I shall address the concerns about uncertainty. Noble Lords’ debates during the passage of the Bill have centred upon the risks to the changes that a principal duty would make and the introduction of uncertainty. Perhaps I may quote my noble friend Lord Smith of Kelvin, who is chair of Scottish and Southern Energy. He wrote to me and agreed that I should refer to his letter to explain what a major British energy company considers. This is relevant, because it relates not only to the perception of the regulator regarding investment, but the need for certainty, which is particularly important. He states: "““We are aware that … people have raised concerns about the remit of Ofgem … it is vital that the legislative framework should not compromise Ofgem’s independence, or objectivity. This is a major issue, with huge consequences, and there are serious concerns from the energy industry over whether this sort of decision should be taken at Report Stage of the Energy Bill—without due consideration or consultation””." I have omitted large chunks of the letter, which goes on to say that, "““the presence of an independent regulator with the requisite powers has led to a highly competitive energy market that has delivered a stable investment climate””." It is of fundamental importance—most of all at the present time, given the challenges regarding renewables and climate change generally—that we have that certainty. Changing it, or even implying some sort of change, which Amendment No. 30 does, would produce a shiver of apprehension and possibly discourage investment within the UK. Finally, I underline how much importance we attach to the issues to which noble Lords has drawn attention—climate change and the like. They have not been neglected. The noble Lord, Lord Whitty, was not present at an earlier discussion on an earlier amendment of the noble Lord, Lord Jenkin. He was gracious in complimenting Ofgem for its activity in social policy, fuel poverty and the need for action in those areas. Similarly, we have made major changes on sustainable development, with huge levels of investment into the system. It is possible, with the present guidance and the amendment of the noble Lord, Lord Oxburgh, to envisage that we will continue to operate within government prescription with regard to climate change and the like. I conclude by paying a tribute to the many compliments that have been paid to Ofgem. I am not entirely sure that I have been able to repay them in the same way by complimenting the level of debate that I have seen all the way through the passage of the Bill.