Sustainable Energy Bill

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Clause 4

Amendments of the Utilities Act 2000

Question proposed, That the clause stand part of the Bill.

11.15 am

The Chairman: With this it will be convenient to discuss new clause 2—Duty of Gas and Electricity Markets Authority to carry out impact assessments.

Brian White: When I originally moved clause 4 it was to place on Ofgem a duty to have regard to the treatment of sustainable energy policy. Also, regulatory impact assessments for Ofgem were mentioned in the White Paper. New clause 2 combines those two, and makes it clear that the authority will be required for all its important proposals to undertake impact assessments, including environmental impact assessments, unless it considers the matter one of urgency or that an assessment is unnecessary. Where an assessment is not undertaken because the authority considers it unnecessary, the authority will be required to publish a statement setting out its reasons why.

The new clause requires the authority to be given general guidance in conducting the impact assessment. Hon. Members will be aware that considerable detailed guidance is available on the procedure, scope and content of impact assessments. The assessment must include an environmental assessment, and the authority is obliged in its annual report to give details of assessments conducted. On the basis of that provision, I am persuaded that an additional duty to have regard to a sustainable energy policy is unnecessary as the key elements of sustainability—social, environmental and economic objectives—are already set out. The new clause would achieve the objective that I wanted to achieve in clause 4.

Mr. Robathan: I am willing to take this at face value—I do not think that there is a Government plot, as I do with most of the clauses. However, can the Minister explain whether new clause 2 will address the major mistake that Ofgem made in the implementation of NETA?

The whole idea of NETA should have included an environmental impact assessment; it should have included the impact that NETA would have on driving down electricity prices. It has been successful in achieving that for good or ill. I do not think that the consequences of driving down electricity prices have been as good as we might wish, and we have already heard that electricity prices are bound to rise—I appreciate the reasons for that, although we are keen on efficiency and the generation of production.

There should also have been an assessment of the impact that NETA would have on CHP and renewables. It actually made renewables entirely unproductive: as the Minister knows, people were closing down wind farms because the generation of electricity was not worth it. Will the new clause

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specifically address the issue that Ofgem should take into account the environmental impact of its policies? The old clause was designed to do so.

Mr. Timms: The new clause will place on the authority a broader requirement than the one that was originally envisaged to undertake and to publish both regulatory and environmental impact assessments, as was outlined by my hon. Friend the Member for Milton Keynes, North-East. I welcome and support that proposal. I cannot tell the Committee what would have been the case if the new clause had been in place before.

There have been some important gains as a result of NETA, but that is for a separate debate. It is right that the new arrangements should be in place. Environmental and regulatory impact assessments should be conducted.

Mr. Robathan: The Minister is new to his job, but his predecessors would accept that the consequences of NETA for CHP and renewable energy were not intended. That is what I am trying to get to the bottom of. We must ensure that further actions by Ofgem do not have NETA's bad, unintended consequences on renewable energy and CHP.

Mr. Timms: I take the hon. Gentleman's point. He is absolutely right, it was not intended that there would be a damaging impact on CHP. Putting the proposal in place will be a defence against undesirable environmental impacts although one cannot guarantee what will happen, as we cannot predict the future. I commend the new clause to the Committee.

Question put and negatived.

Clause 4 disagreed to.

New clause 2

Duty of Gas and Electricity Markets Authority to carry out impact assessments

    'After section 5 of the Utilities Act 2000 (c.27) insert—

    ''5A Duty of Authority to carry out impact assessment

    (1) This section applies where—

    (a) the Authority is proposing to do anything for the purposes of, or in connection with, the carrying out of any function exercisable by it under or by virtue of Part 1 of the 1986 Act or Part 1 of the 1989 Act; and

    (b) it appears to it that the proposal is important;

    but this section does not apply if it appears to the Authority that the urgency of the matter makes it impracticable or inappropriate for the Authority to comply with the requirements of this section.

    (2) A proposal is important for the purposes of this section only if its implementation would be likely to do one or more of the following—

    (a) involve a major change in the activities carried on by the Authority;

    (b) have a significant impact on persons engaged in the shipping, transportation or supply of gas conveyed through pipes or in the generation, transmission, distribution or supply of electricity;

    (c) have a significant impact on persons engaged in commercial activities connected with the shipping, transportation or supply of gas conveyed through pipes or with the generation, transmission, distribution or supply of electricity;

    (d) have a significant impact on the general public in Great Britain or in a part of Great Britain; or

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    (e) have significant effects on the environment.

    (3) Before implementing its proposal, the Authority must either—

    (a) carry out and publish an assessment of the likely impact of implementing the proposal; or

    (b) publish a statement setting out its reasons for thinking that it is unnecessary for it to carry out an assessment.

    (4) An assessment carried out under this section must—

    (a) include an assessment of the likely effects on the environment of implementing the proposal; and

    (b) relate to such other matters as the Authority considers appropriate.

    (5) In determining the matters to which an assessment under this section should relate, the Authority must have regard to such general guidance relating to the carrying out of impact assessments as it considers appropriate.

    (6) An assessment carried out under this section may take such form as the Authority considers appropriate.

    (7) Where the Authority publishes an assessment under this section—

    (a) it must provide an opportunity of making representations to the Authority about its proposal to members of the public and other persons who, in the Authority's opinion, are likely to be affected to a significant extent by the proposal's implementation;

    (b) the published assessment must be accompanied by a statement setting out how representations may be made; and

    (c) the Authority must not implement its proposal unless the period for making representations about the proposal has expired and it has considered all the representations that were made in that period.

    (8) Where the Authority is required (apart from this section)—

    (a) to consult about a proposal to which this section applies, or

    (b) to give a person an opportunity of making representations about it,

    the requirements of this section are in addition to, but may be performed contemporaneously with, the other requirements.

    (9) Every report under section 5(1) must set out—

    (a) a list of the assessments under this section carried out during the financial year to which the report relates; and

    (b) a summary of the decisions taken during that year in relation to proposals to which assessments carried out in that year or previous financial years relate.

    (10) The publication of anything under this section must be in such manner as the Authority considers appropriate for bringing it to the attention of the persons who, in the Authority's opinion, are likely to be affected if its proposal is implemented.

    (11) References in sections 4AA, 4AB and 4A of the 1986 Act to functions of the Authority under Part 1 of that Act include references to any functions of the Authority under this section that are exercisable in relation to a proposal to do anything for the purposes of, or in connection with, the carrying out of any function of the Authority under Part 1 of the 1986 Act.

    (12) References in sections 3A, 3B and 3C of the 1989 Act to functions of the Authority under Part 1 of that Act include references to any functions of the Authority under this section that are exercisable in relation to a proposal to do anything for the purposes of, or in connection with, the carrying out of any function of the Authority under Part 1 of the 1989 Act.''.'.—[Brian White.]

Brought up, read the First and Second time, and added to the Bill.

Clause 5

Gas and Electricity Markets Authority

Question proposed, That the clause stand part of the Bill.

The Chairman: With this we may take new clause

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3—Use of certain money held by Gas and Electricity Markets Authority.

Brian White: My original clause 5 provided powers to use the surplus from the fossil fuel levy fund to promote sustainable energy. New clause 3, which would replace it, has a similar effect but addresses some of the accounting concerns that arose when new clause 5 was originally published. Given the shortage of time, I will not go into details but clause 5 and the new clause that will replace it provide a means for the Government to access the surplus and pay the money through the consolidated fund, to ensure that it is properly accounted for to the House. It restricts the amount of money to £60 million, the amount of funding for renewables announced in the energy White Paper. It is underpinned by the availability of the windfall surplus and levy fund.

New clause 3 thus provides the means to fulfil one of the Government's important energy White Paper commitments.

 
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