Examination of Witnesses (Questions 217-219)
MR VINCENT
DE RIVAZ
AND MR
DENIS LINFORD
2 NOVEMBER 2005
Q217 Chairman: Thank you very much for
coming. Thank you for your memorandum and also for trailing your
visit to us this afternoon in The Independent newspaper
this morning, which we greatly appreciate. We look forward to
hearing what you have to say. May I begin by referring to your
memorandum? You have set out the extent of generation capacity
which you think will be required, the so-called gap. I may have
some further questions on that which I shall put to you in writing
if I may about the details. It does not seem to us that you have
answered the question we posed in our inquiry, namely whether
you think the lights will stay on. Will they?
Mr de Rivaz: First of all I should
like to say that I am extremely pleased and it is a great honour
for us to have been invited to this oral evidence in front of
your Committee. We all know what EDF Energy stands for in this
country: one of the largest energy companies in this market and
20 million inhabitants rely on us to keep their lights on. I take
this responsibility very seriously indeed. Seven point 6% of the
electricity generated in this country comes from our own power
plants; we have five million customers' accounts in our supply
business and for those customers we have a special policy. We
care a lot about them and we have new products which we will probably
be able to talk about later. My key message, including my response
to this expectation that the lights will stay on, is that diversity
is the right approach. I strongly believe that the UK has a chance
at the moment to have a good level of diversity in its generation
sources and diversity is key for meeting the needs of the future.
We are all facing three big challenges and a fourth one probably:
security of supply, global warming, the prices, which have been
going up and we have to look to the future. I do believe that
we need a multi-party consensus to tackle these three big challenges.
Nothing can be achieved in the long term without consensus and
my contribution to that as the chief executive of this company
is to welcome the debate, to contribute to it. I am a strong believer
in the market; the market can deliver provided there is a clear
and stable framework in which this market can operate efficiently.
We are in danger, in the long term, of the market not delivering
because we do not have the visibility on some key questions that
we investors require.
Q218 Chairman: Do you think that is a
gap which the Government should fill?
Mr de Rivaz: It is a responsibility
for any government in any country to provide a stable policy and
a stable framework. It is a responsibility for the industry and
many others to contribute to the debate, to make constructive
proposals, to engage with the Government and then it will be our
responsibility, within the framework, to be an efficient player
in the market.
Q219 Chairman: Is it because of this
lack of clarity at the moment that hardly any investment is going
into new large-scale generating capacity at all, or are there
other reasons for that?
Mr de Rivaz: It is one of the
major elements. We have, for instance, the question of the emissions
trading scheme. We have phase one and we have phase two, where
no decision has yet been taken, and beyond 2012 we have no visibility.
The emissions trading scheme is very important because it is a
market mechanism which can provide a lot, provided it is based
on realistic targets and realistic assumptions and provided, for
instance, that all the objectives that we have in the country
regarding security of supply and also environmental constraints
are put together. A very practical example for us as investors
are some plants which in the framework of the Large Combustion
Plant Directive will opt out, some others will opt in and those
who are ready to invest in FGD devices, which avoid the emission
of sulphurs into the air, are going to opt in. The emissions trading
scheme at the moment is penalising these generators. There is
a strange situation in which those who are not going to contribute
to the security of supply are going to be advantaged as opposed
to those who are going to contribute both to security and continuity
of supply.
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