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Electricity Generation

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Garel-Jones.]

2.30 pm

Mr. Paul Flynn (Newport, West) : This is very much a story of a man of our time, of Thatcher's man--homo Thatcherus. He is the inevitable result of elevating competition to the level of the supreme virtue, the view that dominates and corrupts the thinking of the Government. My constituency has just had a merciful deliverance from the excesses of homo Thatcherus in the shape of Mr. Angelo Casfikis who planned to reopen a polluting, clapped-out power station under the terms of the Energy Act 1983. Other areas may not be so fortunate because I understand that Mr. Casfikis still has interests in two other sites. Under the Energy Act 1983, the Central Electricity Generating Board will do business with anyone so long as he has the money. There is no provision in the Act to guarantee that power stations are sold to people who are responsible and have good reputations except in the case of nuclear power stations. We are told that we must rely on the protection of the watchdog--the pollution inspectorate.

The pollution inspectorate is not a watchdog. It is a pussycat without teeth or claws. The recent resignations of Mr. Rod Perryman and Mr. David Mills reinforce the view that the inspectorate is in what one member of its staff called an utterly disastrous state--under-funded, under-staffed and feeble in regulatory muscle. Generating electricity by coal presents devastating pollution threats of ashes, soot, 24-hour noise, airborne dust, smoke, sulphur and nitrous oxides and--as is only now becoming apparent and understood--the threat of carcinogens and pollution from the trace elements of arsenic, beryllium, chromium and other trace elements that occur from the stack and in the fly ash and the products of desulphurisation. They present an additional hazard to rivers and water courses. Our knowledge of the hazards of incineration has outpaced pollution controls.

The public need guarantees that their shield against pollution is tough and absolute, that aspirant operators can prove that they are people of high financial probity and that their business careers have demonstrated exemplary standards of responsibility and

accomplishment. A power station at Rogerstone, even in the hands of the CEGB, was an atrocious neighbour with a dismal record of complaints, many caused by the silly decision and ministerial diktat to site it on the floor of a valley. That site amplifies all the irritants of pollution.

Does Mr. Angelo Casfikis match up to those high standards? On Monday and Tuesday of this week I tried to contact Mr. Casfikis to give him an opportunity to contradict any of the details of his colourful career that I am about to give to the House. He was not available, and he has not taken the opportunity that I offered to contact me. However, his representative said that if I mentioned his conviction for fraud, for which he was heavily fined, would I mention that others were involved in the crime? I have now done that. Mr. Casfikis's business record is dreadful. He has set up company after company, milked them and allowed them to run into receivership. However, he always built a


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lifeboat company which he, the captain, could use to sail off into safety, usually with a cargo aboard, taking with him in most cases the assets of the wrecked company.

In 1971, he started a company called A. C. Meats (Wholesale). It was wound up in 1975 with unsecured creditors of £211,000 and assets of £8,000. He immediately registered a new company called Fromeat (International). That company was wound up on the petition of Uniservice of Geneva, to which he owed £54,000. That took place in 1983, but not before he used funds to secure a mortgage on an aircraft for himself at a cost of £180,000. Fropak (International) was registered in 1983 and dissolved in 1986. Fropak (Middle East) was registered in 1982 and dissolved in 1988. Another company, Vivahurst, was registered in 1981 and dissolved in 1988. Its only transaction was the securing of a mortgage on a Mercedes car for Mr. Casfikis. Frocontractors was founded in 1980 and found to have unsatisfactory accounts in 1983 due to irrecoverable debt. As a meat trader, Mr. Casfikis was convicted of fraud. As a contractor to Nigeria, he enriched himself with company funds, wrecking a multi-million pound project and inflicting what the Plateau Investment Co. described as an "immeasurable loss". He then tried to import rice from America to Nigeria. That, too, failed. The winding-up order of the official receiver for Fromeat states : "The liquidation of the company is attributable to the actions of Angelo Casfikis."

A search earlier this year revealed outstanding county court debts against Fromeat (International) at Liverpool county court and Fro-contractors at Epsom and Barnet county courts, one being for £1, 100. A search today revealed an outstanding debt order of £552 against Pentwyn, No. 3 at Macclesfield county court. For non-payment of a debt of over £100,000 against Fro-contractors, judgment was given to Mr. David Taylor. Mr. Casfikis liquidated the company three days later and Mr. Taylor was told that it was not worth the price of a stamp to attempt to recover his £100,000.

That is enough evidence to justify insisting that Mr. Angelo Casfikis should carry a warning that states, "This man can damage your financial health. This man should be shunned as a business leper." But no, this is the age of Thatcher man, homo Thatcherus. Mr. Casfikis has been warmly welcomed by Department of Energy Ministers. He boasted that he could pick up a telephone and see a Minister in 24 hours. He has been entertained by Ministers, including the Secretary of State, not once, not twice, but five times. The last time was during September. Few hon. Members could match that.

Why do Ministers continue to court and encourage Mr. Casfikis? The Department of Energy, the Welsh Office and the CEGB were warned of most of the allegations and suspicions in April and July, and later in letters that I wrote. Is that all in the past? Is that all over? Is Mr. Casfikis a changed man now?

The House should know that Mr. Casfikis has two other companies--the Park Level colliery of Godregraig and Pentwyn colliery of Rhiwfawr Cwmllynfell. Both are in the hands of administrative receivers, one as recently as six weeks ago. The insolvency policy unit told me in a letter of 7 December that the companies are at least £80,000 in trouble. It informed me also that income tax and national insurance contributions have not been accounted for. I have two letters, one from the Department of Social


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Security and the other from the Department of Employment, which explain that national insurance contributions have not been paid by Mr. Casfikis over the past two years.

In addition to the tribulations of sickness and unemployment that have been suffered by the men who worked for the companies, they now discover that their employer, Mr. Angelo Casfikis, has been thieving from their pay packets over a long period, with the result that they are not entitled to that for which they paid--sickness benefit and unemployment benefit.

Do Ministers believe that a criminal record, failure in the meat trade, failure in factory building, failure as a rice importer and failure as a mine owner qualify Mr. Casfikis to be, as was described by The Sunday Times,

"Britain's first power station broker"?

Homo Thatcherus : is this his way of life--the inevitable and ugly consequence of a creed that sees competition as a supreme virtue and holds that rampant, permissive competition, red in tooth and claw, should be given free rein to dominate, pollute, cheat and abuse? Homo Thatcherus has a varied habitat. One day he is flattered and feted by Ministers in Millbank, the next he is picking the pockets of his own workers for pennies. Is Mr. Casfikis to continue setting up new companies, looting them and abandoning the wreckage of debts, redundancy and the damage done to innocent lives caught in his schemes? He seems to be doing that with the support and encouragement of Ministers in the Department of Energy.

On 14 February, The Sunday Times reported that, in a meeting with the Secretary of State for Energy, Mr. Casfikis was told that the Government would see whether private generators could be compensated because they might be unfairly forced to produce clean energy. I raised with Ministers and with the CEGB the question of what protection one might expect.

In a letter dated 23 November, the Minister informed me that, when I asked whether his Department had undertaken an investigation into Mr. Casfikis's business activities, it was for the CEGB to form its own commercial judgment of those with whom it chose to do business. He added that it was not the Government's job to make commercial assessments. If it is not, what went on in the discussions with the Secretary of State for Energy and with the Under-Secretary of State, who is to respond to this debate?

In a letter from the CEGB dated 24 November, I am informed that it would be invidious for the board to investigate the private circumstances of all its potential contractors before signing contracts. Its chairman adds :

"We could be accused of discrimination and unfair trading if we attach undue weight to an individual's past record."

If that is so, who is to protect areas such as Rogerstone? Will the Minister answer my questions? Will the Energy Act and future electricity Acts attract more crooks to the generating business? Did the Minister encourage Mr. Casfikis at any time? Did he intervene, as Mr. Casfikis suggests, on his behalf in any way to put pressure on the CEGB? If not, why did the Minister see Mr. Casfikis five times, the last occasion being on 30 September? What further protection does the Minister propose giving in order to guarantee that no one with an appalling record such as that of Angelo Casfikis will be allowed to generate electricity in Britain and to ravage the habitat and peace of mind of local communities?


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2.42 pm

The Under-Secretary of State for Energy (Mr. Michael Spicer) : The hon. Member for Newport, West (Mr. Flynn) has made a string of personal attacks under the cover of privilege, and from those he has drawn several general conclusions and asked questions about the workings of the Energy Act 1983, about our proposals for its replacement, and in particular for the privatisation of the electricity supply industry.

The hon. Gentleman will not be surprised if I draw rather different conclusions from him about the working of the 1983 Act. The main provisions of the 1983 Act, he will remember, are to allow anybody to generate as a main business ; to offer a guaranteed market for independently produced electricity ; and to allow common carrier access both to the national grid and the local distribution networks for independent generators.

The Act breaks the CEGB's statutory monopoly on generation by allowing private companies to generate and supply electricity as their main business. While no ministerial consent is required for the construction of a private generating station--with the exception of a private nuclear power station, as the hon. Gentleman mentioned--such projects continue to be subject to local planning authority procedures.

Where area boards are obliged to purchase electricity from private generators, the Act sets out the basis on which the industry is to frame its tariffs. Such purchases are to be on terms that will not increase the prices payable to the boards' customers. The price offered therefore represents a saving made by the board by not having to purchase an equivalent supply of electricity from the CEGB. The so called "avoided cost" principle has turned out to be one of the main defects of the 1983 Act. It has been an important reason for the continued effective monopoly of the CEGB and for the fact that in practice large-scale competition has not been able to develop. That is mainly because of the way the CEGB has chosen to define avoided costs in framing its tariffs, which has not allowed independent generators a proper return on their investment. Similarly, area boards have been reluctant to offer to purchase independently produced electricity except where they are obliged to do so under the terms of the 1983 Act.

However, in recognition of the Government's desire to see greater competition, the CEGB decided to sell off redundant power stations at Rogerstone, Connahs Quay and Barrow-in-Furness, and it is the CEGB which currently determines the terms on which the stations might be sold. One of those conditions, incidentally, is that before any final sale can go ahead, the prospective purchaser needs to have obtained the necessary planning consents. That of course has been critical in the context of the particular case to which hon. Member for Newport, West referred in the debate.

Under the terms of the 1983 Act, the South Wales board is bound to purchase the electricity from the independent generator, but only at a price commensurate with the avoided cost principle. The generator must also comply with new emission controls. That is a direct answer to the hon. Gentleman's question about what emission control standards are forthcoming. The generator must comply with new emission controls, whereby new or re- opened coal-fired power stations must be fitted with


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equipment aimed at reducing sulphur dioxide emmisions. Of course, the planning associated with that requirement was another reason for that particular application not going ahead.

I have met several potential independent generators, and officials in my Department have now had more than 100 meetings with independent generators, so there is nothing extraordinary about the Government meeting potential independent generators. I explained to Mr. Casfikis, as I would explain to any other potential independent generator, that the role of the Department of Energy in this context, particularly under the 1983 Act, is almost non- existent. I hope that answers some of the hon. Gentleman's questions.

Mr. Flynn : I wish to make two points. First, the control of pollution is a matter for the British inspectorate and a number of other bodies, which is a matter of great doubt. Secondly, did it really take five meetings to tell Mr. Casfikis that the Department could not help him in any way?

Mr. Spicer : On the hon. Gentleman's first point about pollution, the Government have introduced stringent new standards in regard to sulphur dioxide which apply to new or reconverted power stations. That is rather a critical point in this case, and for the hon. Gentleman to imply that in some way or other our electricity policies are increasing the level of pollution in Britain is to fly in the face of what the Government are doing. We are increasing substantially the anti-pollution standards, and that process will continue. The application in question fell down on that precise point.

The answer to whether it took me several meetings to explain to Mr. Casfikis that the Government had no locus in this matter, is yes. I met Mr. Casfikis at his request on two or three occasions, and on each occasion it was explained to him what could be done under the terms of the 1983 Act. We explained to him our proposals for a privatised electricity industry and what could be done outside the terms of the 1983 Act with regard to the avoided cost principle. I anticipated the hon. Gentleman's question by looking at the minutes of the meetings. They refer constantly to the fact that I said that the Government had no locus in the matter and that it must be decided by the CEGB and the area electricity board--in the latter case whether it wants to buy the electricity, and in the former case whether it wants to sell the power stations.

The hon. Gentleman has raised an important point about whether the 1983 Act is to be blamed for what is happening. It is important to look at the wider policy


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implications. I draw very different conclusions about the working of the 1983 Act from those that he draws. The restrictive nature of the Energy Act 1983--the fact that it has left the CEGB as a monopoly and also the fact that the avoided cost principle has proved to be a deterrent to major new entrants--is the real issue.

Since we published our White Paper on the future of the electricity supply industry earlier this year and declared our intention seriously to open the industry to new entrants, there has been a flood of interest from major energy-related companies. Whereas under the 1983 Act the field had been left to small companies dependent on the CEGB--I stress that point--the position now is that we know that at least 16 projects are being proposed by major international companies that will be serious competitors to the two successor companies to the CEGB.

Furthermore in direct answer to a point that was made by the hon. Member, I should tell him that clause 3(1)(b) of the Electricity Bill, the Second Reading of which we shall debate next week, specifically gives to the Secretary of State and the Director of Electricity Supply the duty to secure that licence holders--licence holding has not been a feature of previous legislation--are able to finance the carrying on of the activities that they are authorised by their licences to carry on.

As to the specific case of Rogerstone, to which the hon. Gentleman referred, he will know that, in the event, the local planning authority turned down the application from Independent Power and Energy which would have enabled the site to reopen for generation. I also understand from the South Wales board that it did not prove possible to agree satisfactory commercial terms for the purchase of electricity from Rogerstone. Independent Power and Energy had originally hoped to agree a contract outside the terms of the 1983 Act.

In those circumstances, I am told by the CEGB that it will not proceed with the sale of the site to Independent Power and Energy and that it will put it out to fresh tender. The board is of course aware--from the hon. Gentleman as much as from others--of the local pressure to make the site available for alternative industrial or housing use rather than have the station reopened. I am sure that the CEGB will bear in mind these concerns, but the terms on which the site is ultimately sold--this is the fundamental point that I wish to make to the hon. Gentleman--will, under the present legislation, be a matter for the commercial judgment of the board, with a willing seller and a potentially willing buyer.

I do not expect the hon. Gentleman necessarily to accept all the Government's arguments, but I hope he will accept our response to the questions that he has put to us.

Question put and agreed to.

Adjourned accordingly at seven minutes to Three o'clock.


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