Supplementary memorandum from the Combined
Heat and Power Association
1. With reference to question 1 (Mr Green):
can you confirm that you are referring to the final report of
the Consolidation Working Group?
Yes, I was referring to the Consolidation Working
Group, which OFGEM is facilitating for the DTI.
Since my evidence session at the Committee,
OFGEM has published (on 7 February) the report. It has not been
accepted as an accurate reflection of the issues and I attach
a copy of the joint letter sent to OFGEM. 
2. With reference to questions 14-15: We
would be grateful if you could send the figures on the employment
levels of Siemens of CHP in Germany.
Regarding employment levels of Siemens of CHP
We have pursued this question with the company.
They advise that it is difficult to give a precise answer, since
they do not maintain records specific to the number of people
working on CHP. It is the case that many of the component elements
of a CHP plant are common to other power generating technologies,
and hence a demarcation between staff employed in CHP and other
generation business can be difficult to determine. This is particularly
the case for Siemens who supply into a wide range of markets.
Germany is the centre of Siemens Power Generation
business. The company state that the total number of people employed
worldwide by Siemens in their Power Generation business is about
26,000. They advise that a safe assumption would be that between
5 per cent and 10 per cent are employed in CHP business, implying
total employment in this market sector of between 1,500 and 2,500.
These people are employed in the project management, engineering
and construction of plants, as well as the manufacture of gas
turbines, stream turbines, generators and other equipment for
3. With reference to question 22: Can you
confirm whether there is any written documentation to show that
DTI had been in favour of a single cash out price?
As to the statement about the DTI favouring
single cash out price.
This point was made by a senior DTI official
during the course of a meeting the Association had with Peter
Hain whilst he was Energy Minister. As I do not have access to
the official note of the meeting I am unable to provide specific
However, in respect of the wider impacts of
NETA and the need to ensure that the new arrangements would accommodate
renewables and CHP, the October 1998 White PaperConclusions
of the review of Energy Sources for Power Generation is quite
"6.41 The Government has identified
some areas on which further consideration will be needed. These
include: . . .
Renewables and CHP. There are also
concerns about the way the proposed arrangements might impact
on some renewables generators and CHP plants where the output
is relatively small and difficult to predict. Arrangements need
to be developed to help these generators to operate effectively
within the new trading arrangements.
NFFO . . . The proposed arrangements
do not contain a Pool price to use as a reference price in NFFO
contracts and a new reference price or other solution must be
I hope this will assist the Committee, and I
am also attachng a copy of the DTI Press Release that set out
the Government's overall approach in 1998, and made specific reference
to "encouragement" for CHP and renewables.
4. With reference to question 26: Can you
confirm which company you were referring to in this question.
The company referred to was Smartest Energy
Ltd (who is also a co-signatory to the letter to OFGEM concerning
the outcome of the Consolidation Working Group).
7 See Annex. Back
Department of Trade and Industry, Press Release P/98/769 dated
8 October 1998 [not printed here]. Back