APPENDIX 2
Letter from Malcolm Wicks MP, Minister
for Energy DTI
I was pleased to be able to appear before the
committee on 10 October and answer your questions in relation
to the energy review and the significant programme of work we
are now taking forward.
I agreed to come back to you on two specific
points that were raised during the discussion.
1. The Honourable Member for Wolverhampton
South West raised the issue of contractors used by the Warm Front
Scheme and Government measures to ensure no abuses of the system.
Eaga, the Warm Front Scheme Manager, sub-contracts
a number of heating and insulation installers to provide measures
to perform this Warm Front work, via a competitive appointment
process. Warm Front has harmonised labour prices across a number
of installer regions in England. This means that appointed installers
can only apply a standard labour charge for work carried out in
any given location. For installers to receive work through Warm
Front they need to satisfy requirements for good customer service,
professional workmanship, and financial probity.
The Scheme also has two national contracts for
the provision of heating materials. The prices for these parts
are agreed and reviewed centrally by Defra (a process outside
the control of the sub-contracted installers).
It should be stressed that Warm Front's prices
are independently monitored by Defra, and by White Young Green,
their independent quality assurance team. It is worth noting that
Warm Front prices cannot always be compared accurately with privately
obtained quotes. This is due to the comprehensive after-care package,
which includes an annual service visit for all new boilers, and
access to a 48-hour emergency breakdown service.
Warm Front prices are under continuous review,
and the Scheme continues to seek both efficiency and economy savings
wherever possible. Review of the competitiveness costs is something
that is part of the regular audit and monitoring process, that
feeds in to the review of the delivery and impact of the Warm
Front Scheme.
2. The Honourable Member for Crosby raised
the specific question of investment levels required to upgrade
the distribution network to allow for the connection of microgenerators.
The Microgeneration Strategy recognises the
issues around connecting microgeneration technologies to the distribution
network and allowing them to export electricity back to those
networks. As I mentioned in my evidence session, it is already
possible for interested parties to connect their microgeneration
system to the network and receive payment for their excess electricity.
The network operators have indicated that they are not concerned
about this at the moment as the numbers involved are small, but
as penetration levels rise significantly (as I hope will happen
as the measures in our strategy start to have an impact), work
will need to be undertaken to upgrade the network.
A study carried out by the Energy Saving Trust
on behalf of the DTI (Potential for Microgeneration: Study
and Analysis) assessed the implications of substantial levels
of microgeneration on the UK electricity system. This built on
an earlier study carried out for the DTI by Mott McDonald (System
Integration of Additional Microgeneration). The EST report
suggests that, for relatively high levels of exported electricity,
the costs of upgrading the network could be anywhere between £122
million to £240 million. But there are many variables that
could impact on these cost levels—distribution networks
vary widely and the penetration at levels at which problems may
occur and the costs of mitigation measures will also vary. Another
issue is whether the work s carried out as part of a programme
of routine maintenance or whether a specific programme is set
in place.
I do intend to pursue this matter further, and
my officials will meet with National Grid to discuss their concerns.
The issue will also be addressed as part of the review of the
incentives and barriers to distributed electricity generation
following on from the Energy Review Report. This review will look
at economic and other incentives on Distributed Network Operators
to connect new generators and to upgrade distribution networks
in order to accommodate increasing amounts of distributed generation
(including microgeneration).
Following the questions raised by the Honourable
Member for Crosby in relation to the use of microgeneration in
schools, I have written to the Minister of State for Schools drawing
our exchange to his attention. The committee also requested to
be kept informed of all consultations as they happen. In the first
instance I would direct you to the energy review website, www.dti.gov.uk/energy/review,
which has links to each consultation as they are published. We
would, of course, be happy to provide hard copies of the documents
should you require it.
6 October 2006
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