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The hon. Gentleman and the Trade and Industry Committee produced an excellent report. We are acting on those recommendations. Indeed, if we do get into an emergencyI do not think that we will, and we should get things into perspective, as I have been sayingsuch mitigating factors can be introduced. We
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are a long way along the route to helping, in strict accordance with the recommendations that he made. He is right to suggest that the weather may not be unseasonal, although I think that the weather has improved since 1997I would make that claim on behalf of the Government. None the less, a cold spell this late in the winter with storage capacity out of action is a series of events that we could have done without.
Helen Goodman (Bishop Auckland) (Lab): In my constituency two factoriesPotters Ballotini and Weinbergerhave been closed since November, allegedly temporarily, even though their sister plants on the continent are still open. At the same time, I understand, Barclays bank is paying its energy traders record bonuses. I find the Secretary of State's statement that supply is meeting demandother than in a textbook senseextraordinary. Can he not admit that it was precipitate to liberalise our energy markets before countries in the rest of Europe liberalised theirs?
Alan Johnson: No, I think that that was absolutely the right thing to do. As for how it has worked for our customers, both domestic and industrial, British industry, for instance, has paid something like £8 billion less for its energy since liberalisation than German industry. The record of UK companies' energy costs has been very good. We have a problem this wintermy hon. Friend refers to companies in her constituencyand I do not want to diminish in any way the effect on energy-intensive users: it has been dramatic this year, and it is something that we cannot deny.
My point about demand meeting supply is that National Grid issues a gas balancing alert when supply is not matching demand. It looks at the situation every day. Yesterday morning it decided that it should issue a gas balancing alert, because supply was not meeting demand. This morning it decided that it should not do so, because supply is meeting demand. That is the only point that I was making on behalf of National Grid. I was not trying to make some great philosophical point about the political situation with energy.
Mr. Alex Salmond (Banff and Buchan) (SNP): Does the Minister accept that it is little consolation for consumers facing sky-high prices and major users facing interruptions in supply to be told by the Minister that yesterday's announcement is part of a grand master plan that is working exactly as it should? Is it not weak-kneed and feeble to claim that a fire in a single installation can bring the UK gas market into chaos and disarray? When will the Government accept responsibility for the lack of capacity in the system and the lack of investment, principally caused by Ofgem, which has delayed Norwegian supplies to this country? Why, with 24 discovered but underdeveloped gas fields west of Scotland, have the Government imposed a 10 per cent. supplementary charge on pipeline infrastructure, which has delayed their development? Does the Minister think that that is a good idea, in the circumstances?
Last year there were a record number of licences for exploration in the North sea, and we are pleased by the amount of interest there. All the major
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explorers have continued to make the point that they are interested in looking for supplies in the North sea, but increasingly they are looking longer for fewer resources. In the spirit of knockabout it is good to suggest that there is a magic wand that we could wave to put the situation right this winter. All that we can do is put it into context and make the argument about what needs to be done to rectify the situation for British business. What is needed is liberalisation in the European Union and more investment in pipeline facilities and storage. Some £10 billion of investment will be made by the private sectorwe would never have been able to do that in the public sectorin the next few years. It is easy to exaggerate the problems and the situation in the UK, but it is incumbent on us to put the issues in perspective and to repeat yet again that there is no emergency.
Mr. Bob Blizzard (Waveney) (Lab): Is not the lesson from yesterday that even in exceptional circumstances the system worked as it was designed to work? A couple of weeks ago, I asked the head of one of the largest European gas companies why his company was not trying to sell more gas to this country when our prices were higher. His answer, quite simply, was, "I am sewn up in long-term gas contracts with my customers, and I have to put them first." Does my right hon. Friend accept that explanation, and if so, does it not say something about the balance between the amount of gas that this country receives on long-term contracts and the amount that people are buying or supplying on spot prices?
Alan Johnson: It is undoubtedly the case that in continental Europe there are far more contract supplies of gas and energy. In this country, the position was similar until recently. More companies have decided to buy on the spot market, and who can blame them, as it was producing gas at 22p a therm only 18 months to two years ago? In Europe there are more contractual supplies than in the UK, but across Europe we need transparency, as my hon. Friend the Member for Sherwood (Paddy Tipping) said, and a liberalised market. If we can achieve that, we can ensure that instead of having national championsa system pursued by many European Union countrieswe have consumer champions producing the low energy costs that we have enjoyed in this country for many years.
Mr. Peter Bone (Wellingborough) (Con): The Secretary of State is right to say that the problem lies with liberalisation in Europe and that the Government have tried to do something about it. However, they have been trying to do that for many years, so why does he think that the Europeans are going to listen to him now?
I do not know how many years we have been trying, but one thing is different: the Commission, and Commissioner Neelie Kroes in particular, are determined to tackle the issue. The Barroso Commission is a breath of fresh air, given the intensity of its desire to liberalise not just in energy but in other areas that remain unliberalised, and given its whole approach to regulation throughout the European Union.
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Mr. John Grogan (Selby) (Lab): The Government have said that the owners of LNG terminals and gas storage facilities must either use them or lose them. Is there not a strong case for establishing the principle of third-party access for suppliers to storage facilities and terminals to enable the market to operate more effectively?
Mark Pritchard (The Wrekin) (Con): Does not the recent series of events show how UK plc is vulnerable when its energy supplies are disrupted? If the Secretary of State agrees, will he tell the House what new measures have been put in place to ensure that our storage and infrastructure facilities are protected from malicious attack?
Alan Johnson: We have a vulnerability this winter and next winter. Beyond that we do not expect our situation to be any more vulnerable than that of any other country. We are fortunate that we still have an indigenous supply. [Interruption.] It may be declining, as the hon. Member for Rutland and Melton (Mr. Duncan) says from a sedentary position. We may be a net importer of gasbut of all the G7 countries, only Canada is not a net importer of energy. I think that we will be in a position similar to that of other countries. As for malicious attacks, if the hon. Gentleman is talking about terrorism, we have long-standing measures in place to protect against that, particularly at our nuclear facilities. We believe that those measures have worked, and will work in the future.
Mr. John Redwood (Wokingham) (Con):
What specific measures would the Secretary of State like the European Union to take to address the gross distortions
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of the continental gas market, and what is the time frame for getting those remedies in place so that they take effect?
Alan Johnson: The specific remedies will be, first, transparency, with everyone being absolutely open about the energy supplies that exist in the European Union. That is a big issue for the EU. Germany imports about 41 per cent. of its gas from Russia and is extremely worried about being over-dependent on Russia. There is an urgent need for the European Union to look at its own resources. Secondly, although other member states were due to liberalise seven or eight years ago when the directive went through, that has not happened. Policy has not been put into practice. That needs to happen, which is why Neelie Kroes is looking at anti-trust measures that should be adopted to galvanise the situation. On the time scale, we expect anti-trust measures to be taken within weeks, as I said earlier. Beyond that I am not sure, but we are seeing a level of activity in the Commission that we have not seen for many years.
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