| Previous Section | Index | Home Page |
NATIONAL HEALTH SERVICE (RESIDUAL LIABILITIES) BILL [MONEY]
Queen's recommendation having been signified--
Motion made, and Question put forthwith, pursuant to Standing Order No. 50A(1)(a),
Question agreed to.
Mr. Deputy Speaker (Sir Geoffrey Lofthouse):
With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 14A (Consideration of draft deregulation orders),
Question agreed to.
Electricity Pricing
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Bates.]
Mr. Paul Tyler (North Cornwall):
At this time of night, matters of interest and concern in relation to the privatised utilities are familiar territory to you,Mr. Deputy Speaker, and to the House. The regulators of those utilities often feature largely in such discussions. They include Offer, the Office of Electricity Regulation, Ofgas, the Office of Gas Supply and Ofwat, the Office of Water Services. We have not yet had Offrail or Offmilk, which were threatened at one stage. If the weekend recommendation that the monarchy might be privatised were accepted, we might find ourselves discussing Offcrown or, indeed, Offhead.
Despite the time of night, it is important to recognise that there is an issue of national significance here, although I shall also consider it in relation to the part of the south-west that I represent. There is consumer representation, which is extremely important, but the committees that represent the consumer increasingly find that their concerns are not being fully reflected in the way in which the industry is regulated. That applies to all the privatised utilities.
To a large extent, that is due to the buck-passing between the Minister and regulator in each of the respective sectors. The powers that each has and their inter-relationship is as important as the regulators' statutory responsibility. My colleagues in the south-west and I had a meeting today with professor Stephen Littlechild, regulator of the electricity industry. That clarified the borders of his responsibilities vis o vis the Minister.
Clearly, unbridled competition between regional electricity companies, the so-called RECs, is pre-supposed because that is what privatisation is all about. Equally, that competition pre-supposes elimination of the cross subsidies that were a feature of those utilities.
The National Grid, however, is a different matter: it is a national monopoly. It would indeed be a political decision to insist on full distance-related charges, especially if such charges now arise disproportionately. At the time of privatisation, assurances were given that the grid would remain a national service. Compare this privatisation with, for instance, the privatisation of British Telecom. What if, in those circumstances, that entire national service had been subjected to a straight distance-related charge? There would have been uproar by now, especially in the more peripheral parts of the United Kingdom.
The chairman of the South West electricity consumers committee has drawn the attention of hon. Members representing my region to a new development. He writes:
I emphasise that, although the chairman referred to the south-west, the principle will apply throughout the country, and the more peripheral areas furthest away from the centres of generating capacity will suffer similarly.
An excellent overview by the Centre for the Study of Regulated Industries shows that the typical South Western Electricity domestic bill for 1994-95, after rebates, was £303.66--the highest in England. I know that Conservative Members representing my region will share my fear that, having already reached the highest point, we are likely to be pushed even further away from the norm.
There are, of course, many factors at work, and the future is very unclear. The CRI brief shows that a number of influences may affect future prices: National Grid rebates, distribution price controls and the sale of the nuclear elements of the generating industry--and, indeed, the extent to which that may or may not be postponed, and its effect on the nuclear levy. There are also the reductions in overall generating prices as a result of new contracts; and who knows what competition will do?
I do not want to overestimate the extent to which the latest development to which our attention has been drawn will alter the overall level of electricity costs in the south-west, or, indeed, other areas that are similarly affected. One thing is certain, however: the cumulative disadvantage is likely to increase rather than decrease. That was recognised today--by complete coincidence, as far as I am aware. In Northern Ireland, it has now been acknowledged that the discrepancy requires the award of a £60 million grant. Some of us in other parts of the United Kingdom may feel that our case is almost as strong. All areas of this kind--the south-west, Wales and Northern Ireland being the most obvious--tend to contain more small industrial firms, so they cannot even benefit from the high-volume tariffs that are comparatively common elsewhere.
Along with my south-west Liberal Democrat colleagues who are here this evening, and who attended our meeting with the regulator this afternoon, I have some special concerns. If the differential is allowed to increase, even discriminating within the South Western Electricity area--more specifically, for each National Grid zone within that area--regions such as Cornwall and Devon will be hit particularly hard. That will add to the existing calamitous water and other household costs in an area where, after the initial experiment with gas competition, we are bound to face higher prices than other parts of the country.
I need hardly remind the House that the south-west has high unemployment and low household incomes. Cornwall is especially badly affected by both. The cumulative effect of that series of differentials is disastrous.
There are wider implications for similar parts of the country. Professor Littlechild agrees with that but has also said:
The House will immediately realise that those signals will be effective only if they are aimed at the appropriate decision makers. That is a sine qua non. Secondly, they must be sufficiently powerful to offset other economic factors pulling in the opposite direction. No one will decide on the basis of the so-called signals to invest in new generating capacity in an area such as Cornwall without other factors being brought into play. There is evidence that the signals will, in the present circumstances, fail on both counts.
If the signals are imposed on the consumer, they will have no impact on the decision makers. The generators take investment decisions, not the consumers. In the past, consumers have had little or no impact on generating capacity. It should be remembered that in the far south-west, the Central Electricity Generating Board closed down power stations at Hayle, Plymouth and Yelland against local opposition. Many of us felt that employment, economic potential and spreading energy capacity around the country were important objectives that those decisions went against.
The decision makers ignored the effect on local people then, so why should they listen to local consumers now? It is ironic that the CEGB took those decisions on the specific ground that transmission charges from elsewhere in the United Kingdom were likely to be so low that the closures would be cheaper than continuing local generation, which they argued would be too expensive. Some hon. Members here tonight will recall those decisions being made against local opposition.
Offer and the RECs cannot have it both ways. If they argue, as they appear to, that the costs will be only marginal, clearly they will have only a marginal impact.
That, for the purposes of any Act resulting from the National Health Service (Residual Liabilities) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to that Act in the sums payable out of money so provided under any other enactment.--[Mr. Bates.]
That the draft Deregulation (Special Hours Certificates) Order 1996, which was laid before this House on 19th February, be approved.
That the draft Deregulation (Friendly Societies Act 1992) Order, which was laid before this House on 12th February, be approved.--[Mr. Bates.]
10.16 pm
"The Office of Electricity Regulation has recently unveiled proposals to increase the electricity transmission charges imposed by the National Grid Company on electricity supplied to the South West. As you will know, customers in the South West are already penalised by a charging structure which takes account of the distance that power has to be transmitted from the generating stations,
12 Mar 1996 : Column 888predominantly in the North of England, to the consumer. It is now proposed that the costs of losses on the transmission system be recouped in the same manner.
The existing charging structure already means that electricity customers in the South West pay more than almost anywhere else in the country. These latest proposals could mean further increases of up to 2 per cent., with Devon and Cornwall being particularly badly affected."
"there are important advantages in more cost-reflective transmission charges. Better pricing signals will encourage investment in new generation plant in areas where it is needed, like the south-west. This would also increase energy efficiency, reduce the need for new transmission lines and benefit the local economy."
| Next Section
| Index | Home Page |