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Energy Bill

At the time of privatisation, when the rules under which Ofgem operates were set, it was required to have regard to competition in particular. Ofgem officials have always fallen back, in my discussions with them, on that requirement. With the legislation, we are trying to clarify and emphasise some of Ofgem's roles, so that we can get it into a better position to deal with the issues, without damaging the way in which we expect companies to bring forward long-term investment. For example, if we were to start arbitrarily changing the parameters of Ofgem's activities, investors—many of whom are from other countries and are putting large amounts of resources into the UK—would question whether they wanted such a presence. Because this market is a good one, I believe that most of them would want to be here in any event. However, there are degrees and proportions of investment, and we therefore want to ensure that we have the Ofgem rules right. We have listened with care to the arguments in this place and the other place on how to introduce issues such as the need to look after the interests of future consumers and sustainability. We have also examined how to ensure that electricity transmission issues are better addressed. In the other place, Lord Oxburgh urged the Government to consider bringing forward a power for the Secretary of State to intervene to resolve some of the grid access issues if the current industry process to reform the codes and licences were to fail or be delayed in some way. Having given that careful consideration, we introduced amendments Nos. 55, 56, 57, 72, 76 and 102 to deal with the problem. It is vital that the industry negotiations make significant progress quickly, and that the Secretary of State should therefore be given the power to intervene only if that proves not to be the case. These amendments will give the Government the power to amend licences and codes and will help deliver the high-level principle set out in the transmission access review. It may be used only for the purpose of facilitating access to, or efficient use of, the transmission system. The power is time-limited to two years from the date of commencement, and the Secretary of State is obliged to consult the holders of any licences that will be affected, Ofgem, and anyone else he considers appropriate. I believe that, together, these amendments will at least assist in dealing with the issues of grid access and strategic investment, as well as helping to make sustainability a more prominent part of Ofgem's culture as it continues further to develop the work it has already done in this area. I am not presenting this to the hon. Member for Angus as a panacea; it is not. We recognise precisely what he says—that there are issues about transmission access to the grid and that they have to be resolved. That is why we sought the transmission access review to look further into how to resolve these problems, and the process to get agreement on how to deal with it is now under way. This will give the Secretary of State the ability to resolve some matters—if necessary, on the grounds that agreement has not been reached. Amendment No. 64 was made in response to another of Lord Jenkin's proposed amendments in the other place. It introduces a new clause to give the Secretary of State a regulation-making power to provide for distribution network operators to charge up front for the work carried out in providing network connection offers. The practice of up-front charging was until recently carried out with Ofgem's approval—until it was found to be unlawful. The Government believe that an element of up-front charging for assessment work related to large commercial projects is an efficient way of balancing the need to promote competition in the market for distribution network connections, while disincentivising speculative connection requests. What happens is we get these speculative requests, they get a slot, they crowd out those that are more definite, and it ends up with those who want access being put further down the queue. We need the capacity to charge some fees, so I believe that this is the right approach. It is envisaged that the regulations will be made, following a consultation by Ofgem to ascertain the most appropriate way of allowing these charges to be levied. Amendments Nos. 65, 69 and 75 are technical amendments to ensure consistency between the powers in the Bill for the Secretary of State to modify licences granted under the electricity and gas Acts and similar powers in the existing statutory framework for the energy sector. I will not go any further into these amendments, but I am happy to answer any questions about them. I recommend that the House accept them.