The
Committee consisted of the following
Members:
†
Afriyie,
Adam
(Windsor)
(Con)
Baldry,
Tony
(Banbury)
(Con)
†
Bone,
Mr. Peter
(Wellingborough)
(Con)
†
Clelland,
Mr. David
(Tyne Bridge)
(Lab)
†
Cooper,
Rosie
(West Lancashire)
(Lab)
†
Eagle,
Angela
(Wallasey)
(Lab)
†
Eagle,
Maria
(Parliamentary Under-Secretary of State for Northern
Ireland)
†
Field,
Mr. Mark
(Cities of London and Westminster)
(Con)
†
Foster,
Mr. Michael
(Worcester)
(Lab)
†
George,
Mr. Bruce
(Walsall, South)
(Lab)
Godsiff,
Mr. Roger
(Birmingham, Sparkbrook and Small Heath)
(Lab)
†
Keeble,
Ms Sally
(Northampton, North)
(Lab)
†
Lancaster,
Mr. Mark
(North-East Milton Keynes)
(Con)
McGrady,
Mr. Eddie
(South Down)
(SDLP)
†
Mackinlay,
Andrew
(Thurrock)
(Lab)
†
Norris,
Dan
(Wansdyke)
(Lab)
†
Reid,
Mr. Alan
(Argyll and Bute)
(LD)
†
Robertson,
Mr. Laurence
(Tewkesbury)
(Con)
†
Robinson,
Mr. Geoffrey
(Coventry, North-West)
(Lab)
†
Stringer,
Graham
(Manchester, Blackley)
(Lab)
Wilson,
Sammy
(East Antrim)
(DUP)
Eliot
Wilson, Committee
Clerk
†
attended the Committee
First
Delegated Legislation
Committee
Monday 12
March
2007
[Ann
Winterton
in the
Chair]
Draft Electricity (Single Wholesale Market) (Northern Ireland) Order 2007
4.30
pm
The
Chairman:
Before I call the Minister, I have some
information for members of the Committee. If hon. Gentlemen wish to
remove their jackets because they are overcome by the heat, they may do
so.
Mr.
Laurence Robertson (Tewkesbury) (Con): On a point of
order, Lady Winterton. We are considering important legislation, and it
is unfortunate that we are doing so again through a statutory
instrument when we hope that the Assembly will be up and running within
two weeks. I feel even more strongly about the matter, given that not
one member of the Committee in the room represents Northern Ireland.
That position may change—the hon. Members may be slightly
delayed—but it is most
unsatisfactory.
The
Chairman:
I am sure that members of the Committee and
others will have noted your remarks, Mr. Robertson, but as
you will probably be aware this is not a matter for
me.
The
Parliamentary Under-Secretary of State for Northern Ireland (Maria
Eagle):
I beg to
move,
That the
Committee has considered the draft Electricity (Single Wholesale
Market) (Northern Ireland) Order
2007.
May I begin,
Lady Winterton, by saying whata pleasure it is again to be
serving under your chairmanship? I am sure that I speak for all members
of the Committee when I say that I am confident that
you will keep us in good order and keep our
proceedings as concise as is commensurate with the importance of the
subject that we shall debate
today.
The order was
laid before the House on 19 February 2007. Its purpose is to enable the
establishment and operation of a single wholesale electricity market
covering Northern Ireland and the Republic of Ireland. The single
electricity market is a key building block in the development of a
sustainable all-island energy market covering electricity and gas. The
aim of the order is to enhance the mutual economic and social benefit,
including security of supply, of cross-border co-operation on energy
matters.
Development
of an all-island energy market has been a strategic policy objective
since the time of the first Northern Ireland Assembly. I hope that what
I am saying will go some way towards dealing with whatthe hon.
Member for Tewkesbury said in his point of order about the importance
of such legislation being considered by the Assembly. All I can say to
him is that, if the Assembly is up and running within the next couple
of weeks, which we hope it will be, it will be able
to finish the work that it indeed started in 1999,
when the long process of creating a single electricity market was begun
by devolved Ministers. We hope very much that it will complete the
job.
Adam
Afriyie (Windsor) (Con): Is there a specific reason why
the measure is being considered today? Could it have been delayed for
perhaps three weeks until the Assembly was in
place?
Maria
Eagle:
The best answer for me to give is that, because of
the uncertainty that there has been for months—indeed,
years—about the restoration of the Assembly, it has been the
policy of the current Administration to proceed as swiftly as possible
with the implementation of the market. It is to be
implemented on 1 November 2007. A delay beyond this month would make it
impossible for us to complete the legislation in the time scale
necessary to get the market up and running. We have already delayed
matters for some time and a further delay would not enable us to
complete the work before the implementation date, as there are some
things that we cannot do until the legislation is carried.
The work was begun in 1999 by
devolved Ministers. Although there are of course issues of controversy
in designing the market between the jurisdictions, we have already had
to put off its implementation from July to November because of the
technical difficulties of doing so. Further delay would be difficult to
countenance partly because of the costs that it would impose on
industry players. I hope that the hon. Gentleman will accept that I am
not just being pedantic. It might seem that a short delay would not
cause too much difficulty, but he will recall that the Assembly was
supposed to be back up and running in November. We are now nearing the
end of March. It is not possible, and it has been our view as direct
rule Ministers that it is not right, for us simply to put the lives of
people in Northern Ireland on hold to ensure that we do nothing until
the Assembly returns. We hope very much that it will do so by 26 March
and that it will be thereafter in the happy position of being able to
complete what it began back in 1999, but we do not think that a delay
would benefit consumers in Northern
Ireland.
Adam
Afriyie:
On a point of clarity, does the Minister
understand it to be the case that from26 March, if the
Assembly sits again, such orderswill be within its competence
rather than that of
Parliament?
Maria
Eagle:
Energy is a devolved matter, so it would be a
matter for the Assembly to deal with. There are some slight
ambiguities—that is why the order is being made under two pieces
of legislation—as to the vires in respect of some of the
order’s aspects. We have therefore been extremely cautious to
ensure that we have cited both pieces of legislation, some of which
will be devolved while other parts will not. Our view is that the
matter would all be devolved, but we have been extra careful to ensure
that there are no difficulties by citing both pieces of legislation in
the
order.
Mr.
Mark Field (Cities of London and Westminster) (Con): I
have some sympathy for the situation in which the Minister finds
herself, particularly as the date by which the devolved Assembly is
likely to be operating has been delayed and delayed by many months.
However, has her Department given thought to the real
concerns of many Northern Ireland subjects about utilities, particularly
the water industry, and the prospect of increased costs?
Would it not therefore be
better and more correct, as my hon. Friend the Member for Windsor was
perhaps intimating earlier, for the devolved Assembly to deal with the
matter as and when it is up and running? There are some dangers in
going down this route, particularly in relation to the potential uproar
in the minds of many Northern Ireland citizens if they find that the
wholesale market leads to rapidly increased electricity prices in the
way that the water industry’s prices have
risen.
Maria
Eagle:
The wholesale electricity market is designed to
benefit consumers, and cost-benefit analysis shows that it will. It is
there primarily to protect the interests of consumers north and south,
and we expect that as a result of its implementation, consumers north
and south will receive net present value
benefit.
I emphasise
that I am not seeking to be intransigent. The legislation must be in
place by the end of the month to underpin the implementation and
trialling of the new systems and procedures before the go-live date of
1 November. If we delayed and did not put the order on the statute
book, the go-live date would have to be put back. That is not in the
interests of consumers north or south. The order is being passed in
parallel with similar legislation in the Irish Parliament. We must
co-ordinate them to ensure that the go-live date is
met.
Andrew
Mackinlay (Thurrock) (Lab): Will the Minister give
way?
Mr.
Peter Bone (Wellingborough) (Con): Will the Minister give
way?
Maria
Eagle:
I will in a moment. The industry expects a go-live
date of November and is planning for that. Any delay would cause an
increase in costs; there is no doubt about
it.
Andrew
Mackinlay:
I can barely contain myself. As usual, the
Opposition have asked the wrong question. The question that the
Minister needs to answerbefore the Committee is why the Dail
Eireann, the Irish Senate and the President of Ireland have passed
comparable legislation through all scrutiny and
legislative stages and given it the equivalent of Royal Assent, yet we
are being given one and a half hours late in the day for reasons that
the Minister fully accepts. When I come to catch your eye, Lady
Winterton, I shall amplify on that. Of course the order is now urgent,
but why has it been delayed so long? We should be
told.
The
Chairman:
Order. Before I call the Minister, I ask
Committee members for brief interventions. I have
allowed one long one from each side, so that is
even-steven, but I am looking for something a little briefer in
future.
Maria
Eagle:
It has not been easy to draft the legislation. We
have had to design the market, and the regulators, north and south,
have co-operated on that.
It has been a difficult, technical piece of work. I commend the
regulators, north and south, and my officials, who will be far too
modest to put any such commendation in their briefing to me, but I
should like to insert one anyway. They have worked extremely hard to
get such a pioneering piece of legislation ready. It has been necessary
not only to agree, north and south, on the design of the market, but to
draft the legislation.
Obviously we have
done that in parallel, although different Parliaments have different
ways of passing legislation. At present, such orders are how
legislation in Northern Ireland is put through the House. We hope that
devolution will shortly enable the Assembly to assume its
responsibilities in that respect. By the time that happens, the
legislation will need to be passed. That is why we have brought it to
the House today, and I make no apology for doing
so.
Mr.
Bone:
I entirely understand the Minister’s
argument, but it seems extraordinary that thisdebate should be
scheduled when no Northern Ireland Members can be present. If we have
to pass the legislation by an order, surely we ought to ensure that it
is scheduled for a day on which Northern Ireland Members can be
present.
Maria
Eagle:
I do not know why some membersof the
Committee, which includes Northern Ireland Members, have not found it
possible to be here. There are always competing
demands on the time of Members. Whether Members turn up to the
Committee is not a matter for me. I am at the Committee and it is
certainly possible for anybody else who is a member of it to turn up.
It is part of a Member’s job in Parliament to ensure that they
schedule their time and can be here when legislation is being
considered. I criticise nobody, but it is not for me to say where the
members of the Committee are.
Maria
Eagle:
No, I have had enough of this kind of
debate.
Mr.
Bone:
If you cannot answer
that—
Maria
Eagle:
No, it is not about that. I want to discuss the
merits of the issue. It is not for me to answer where the other members
of the Committee might be spending their
time.
The initial work
in respect of the order in 1999 led to the signing of an all-island
energy market development framework in 2004, and action to put in place
the flagship element of that work, namely the creation of the single
electricity market. The draft order is made under the Northern Ireland
(Miscellaneous Provisions) Act 2006 and the Northern Ireland Act 2000.
I welcome the constructive comments, as well as the common-sense
approach to co-operation with the Republic of Ireland, in the debate on
the 2006 Act, last June. The hon. Member for Tewkesbury will remember
taking part in that. The proposal to legislate forreform of
the existing wholesale electricity markets in Northern Ireland and the
Republic are set out in a memorandum of understanding between the
United
Kingdom Government and the Government of Ireland.
Similar legislation has been introduced in the Irish Parliament. The
principal objective of both pieces of legislation is to protect the
interests of consumers.
The single electricity market
is a groundbreaking project at the forefront of European Union energy
market integration. It is a good example of what can be achieved by
pragmatic co-operation. It will bring together two small and isolated
markets to form a larger, more competitive marketplace. Along with
improvements to both north-south and east-west electricity
interconnection, the market is a sensible and practical first step
towards longer term British Isles co-operation within a wider
UK-Ireland-France electricity market. The market is firmly set in the
context of the EU’s internal markets for electricity and natural
gas, and the growing regionalisation of national markets, all of which
will help to secure security of
supply.
Angela
Eagle (Wallasey) (Lab): Will my hon. Friend say in
non-technical terms what the advantages of the proposals are, so that
consumers who might come across this debate can understand? Will the
order lead to cheaper electricity prices, more stable markets or the
routing of electricity from one place to another in order that high
prices do not have to be paid at the margin? What will the order
actually do for the average consumer in Northern
Ireland?
Maria
Eagle:
My hon. Friend gets straight to the point in her
typical fashion, which I know very well. The Northern Ireland consumer
will benefit from increased competition, efficiencies and economies of
scale, which should put downward pressure on the wholesale costs that
should ultimately be passed through to consumers. At present a net
benefit of£103 million is expected to accrue from the
creation of the single market. It is envisaged that the benefits will
be split, with about 44 per cent. for Northern Ireland and 56 per cent.
for the Republic of Ireland. Most of them—82 per cent. in each
jurisdiction—will go to benefit consumers. That means that a
£45 million benefit for Northern Ireland will come from the
value of creating the market. That benefit will be shared;82
per cent. will go to consumers and 18 per cent. to producers.
There is no question about the
fact that the market will not only create better security of supply and
increased competition, but directly benefit consumers from both north
and south. Indeed, one of the aims of the market, and of the regulators
who will make sure that it works, will be to benefit consumers north
and south. We hope that as a direct result of the creation of the
market, consumers will, in the medium and longer terms, see cheaper
electricity
prices.
Mr.
Robertson:
The Minister may need to write to me about this
technical point. Can she provide an estimate of how many
consumers—actually, they are not so much consumers as
suppliers—have long-term contracts with generators of
electricity? The system will not be as fluid as Great Britain’s
until that situation changes. A lot of people in Northern Ireland are
on fixed, long-term contracts, are they
not?
Maria
Eagle:
Let me make it clear that we are talking about the
creation of a wholesale single electricity market that will not
immediately affect retail prices. The issue is about creating a single
wholesale market, which should feed through to lower electricity prices
for consumers as a consequence but will not directly create a single
retail electricity market. Committee members should bear that in
mind.
One might say
that there are certain rigidities or anti-competitive pressures on the
retail side in the electricity markets of both the Republic of Ireland
and Northern Ireland. The hon. Member for Tewkesbury and other
Opposition Members may recall that some of the anti-competitive factors
involved in keeping Northern Ireland electricity prices for consumers
somewhat higher than they might otherwise havebeen are a
consequence of how the Conservative Government privatised electricity
in Northern Ireland. Some contracts tie in extra costs that feed
through to consumers. For example, desulphurisation equipment is about
to be installed at the Kilroot power plant, which will have a right to
claim all those costs back from the Northern Ireland
consumer.
In both
markets there are anti-competitive pressures, such as a lack of supply
or rigid contracts, that prevent consumers from benefiting fully from
competition in retail markets. However, in the medium to long term, the
wholesale market will provide more pressure to cut prices for
consumers. Prices from wholesalers and generators will be better than
they could possibly bein the two small, isolated markets that
there are now—anti-competitive markets at
that.
What we are
legislating for today will not directly impinge on retail prices, but
involves the creation of a single wholesale electricity market.
However, there will certainly be such impacts in the medium term. The
market should enable consumers to get cheaper prices as it expands, as
security of supply is extended, as more generators come into what will
be a bigger marketand as better interconnection between
Scotland and Northern Ireland, and Ireland and Wales, comes into play
and makes transmission easier. All that will put a downward pressure on
prices. The order will be a key part of making sure that consumers get
a better deal in
future.
Mr.
Robertson:
Will the Minister give
way?
Maria
Eagle:
I shall give way one or two more times, but I want
to get
on.
Mr.
Robertson:
I am grateful to the Minister, although I
should say that we have two and a half hours. She referred to the fact
that the Conservative Government privatised the Northern Ireland
electricity market and said, I think, that that led to the problems.
That is not so; this Government introduced new electricity trading
arrangements or NETA. They are now called BETTA, or British electricity
trading and transmission arrangements, as they have been extended to
Scotland. Why did the Government not extend that scheme to Northern
Ireland?
Maria
Eagle:
It is not right of the hon. Gentlemanto
try to wriggle out of his party’s responsibility forthe
way in which electricity was privatised and the consequences for
consumer prices. Two generators in
Northern Ireland have long-term contracts that tie in a lack of value
for money for consumers because they
enable—
Mr.
Robertson:
You changed it for England and
Wales.
Maria
Eagle:
I have given the hon. Gentleman plenty of
opportunities to intervene and he is now heckling me from a sedentary
position.
Current
interconnector capacity between Great Britain and Northern Ireland is
not large enough to provide for the full integration of GB’s
BETTA market and the Northern Ireland market, so it is unlikely that
Northern Ireland wholesale prices would converge with GB levels. GB
generators will be able to access the new market subject to having
sufficient interconnector
capacity.
At present,
a north-south interconnector runs between Northern Ireland and the
Republic of Ireland, and the Moyle interconnector runs between Scotland
and Northern Ireland. That is insufficient
interconnector capacity to improve the efficiency of the market. The
trading relationship will be further enhanced when the east-west
interconnector between Dublin and Wales is built and when the second
north-south interconnector comes on stream. This kind of infrastructure
is expensive and takes time to build.
The single market that we are
legislating to create today will play a vital part in improving the
efficiency of the markets, in bringing in further generating capacity
and in respect of security of supply, becauseit will play a
part in increasing competition. The integration of the Northern Ireland
and Irish markets will exploit the island’s existing geographic
and economic links and infrastructure, and will be a step on the way to
much more competition and security of supply. All this will be fed by
greater competition across the whole island and by better
interconnection with Britain—and hopefully with France and the
continent thereafter.
Mr.
Bone:
I am grateful to the hon. Lady for making the case
for a single market, because it is an extremely good thing. Is not the
crux of the issue the complete failure of the European Union to
liberalise its energy market? We have liberalised in the United
Kingdom, but the European Union is letting us and consumers down. What
are the Government going to do about
that?
Maria
Eagle:
The hon. Gentleman, as is the wontof many
in his party, gets very exercised when the European Union is even
mentioned. It has plans for more regional electricity markets and for
improving the interconnection across the whole EU. That can only be
good for the future protection of security of supply across the
EU.
The creation of
the single wholesale market onthe island of Ireland will play
an important part in ensuring that that process can go ahead. The hon.
Gentleman, like other Committee members, will know that creating
interconnection for electricity generation is expensive. It also cannot
be done overnight or in a couple of months on a whim, so long-term
planning
and investment are important. If we are to bring new investment to the
island of Ireland, it is importantthat we can show some
capacity and ensure that a competitive market is in place that can give
investors a return over the many years for which they will be
operating. Building a new power plant is neither a quick or a
short-term decision; it is an expensive decision and represents a
long-term
investment.
The
creation of the single market will reassure new generators who wish to
enter the market to sell their electricity that the interconnection
that they will find will enable them to sell in the north of Ireland,
the south of Ireland and in the BETTA—or NETA—areas over
in GB in due course. These things cannot be created overnight or simply
by an Order in Council; they require a lot of investment by players in
the industry.
We hope
that the order will put in place the correct conditions to ensure that
that is the case. That can only be good for consumers in the north and
south of Ireland who will benefit from more competition in electricity
generation and will, in due course, benefit from falling
prices.
The order
brings together two isolated and small markets to form a larger and
more competitive marketplace. Along with improvements to both
north-south and east-west electricity interconnection, the market is a
sensible and practical first step towards longer-term British isles
co-operation within a wider UK-Ireland-France electricity market. It is
firmly set in the context of the EU’s internal market for
electricity and natural gas and the growing regionalisation of national
markets.
The project
has been ably led and managed by the two regulatory authorities, the
Northern Ireland Authority for Energy Regulation and the Commission for
Energy Regulation. The two authorities are working closely with the
industry to deliver the new market by 1 November. The project is very
complex, and I would like to commend the work that they have done. In
addition to their domestic duties, the two regulatory authorities will
be responsible for the development and governance of the single
electricity market. That will include common trading
arrangements and licensing of market participants. Day-to-day trading
will be managed by a market operator that is being established by the
two transmission system operators, Systems Operator for Northern
Ireland and EirGrid, as a contractual joint
venture.
The need to
secure mutual benefits from the market was raised during the
consultation on the draft order. It is vital that consumers are the
beneficiaries of the new market. If they are not, there is no point in
developing one. Consumer interests have been paramount in the work of
the two Governments and the regulatory authorities. I agree that the
promotion of competition in the market will be a key factor in
delivering those
benefits.
The
memorandum of understanding and thedraft order made it clear
that the new single electricity market should be a competitive market
in which there is effective rivalry between generating companies. That
is in the best interests of consumers. I have worked closely with Irish
Energy Minister Noel Dempsey TD to ensure that necessary action is
taken to deliver competition to the new market. We agreed that
measures need to be taken to tackle the issue of dominance and
transparency in both the northern and southern markets. Commitments
were sought and given by Minister Dempsey and the chairman of the CER
to reduce the Irish Electricity Supply Board’s generating
capacity by some 30 per cent., thereby reducing its market share in the
new market to not more than 40 per cent. by 2010. That will mean the
closure and sale of power plants and the release of generation sites
for new entrants.
The Electricity Supply Board
will be prevented from building any new plants for at least six years.
That process will start this year, and will have a real impact on
competitiveness and help to attract new entrants into the all-island
market. Those are strong measures, supported by the Northern Ireland
Authority for Energy Regulation. The Irish Government’s White
Paper on energy, which has been published today, builds on those
measures. I welcome their commitment to opening up competition to their
generation sector. It presents business opportunities for UK and
Northern Ireland-based companies, but we must be realistic about how
much competition can be
delivered.
The
all-island market is still very small compared with other EU markets.
Although the market will cover a large geographical area, it will only
be the size of Greater Manchester’s in terms of output and
customers.
This is a
short technical order of 12 articles and four related schedules. It
covers the provisions needed to get the market up and running. The
order was amended following the consultation exercise, but it was not
possible to take on board all of the proposals that arose. For example,
the order was amended to cover best regulatory practice, but it was not
possible at this stage to include provision for a separate appeals
mechanism. That issue will be considered further in the light of
discussions with interested parties on the existing arrangements for
the single electricity market.
Articles 3, 4 and 5 of the
draft order provide for the Department or the authority to modify the
conditions of licences for the generation, transmission or supply of
electricity in connection with the single electricity market. They also
provide for the introduction of a licensing regime in respect of the
function of the market operator of the single electricity market and
for property arrangement schemes to facilitate the transfer of property
rights and obligations between the owner and operator of a transmission
system to implement the single electricity
market.
Articles 6 to
8 provide for the establishment of a special committee of the authority
to be known as the SEM committee. That committee will take any decision
regarding the exercise of certain functions of the authority,
especially where it considers such functions materially affect the
single electricity market or are likely to do
so.
Andrew
Mackinlay:
I understand that the SEM committee will be a
joint authority created by the Irish Republic and the United Kingdom.
Will its decisions become wholly writ, or law, in the Irish Republic
and the United Kingdom—which is to say, Northern Ireland? Does
the committee have the power to create what I would call byelaws or
regulations? What is the status and authority of the
committee?
Maria
Eagle:
Technically, the committee will be a sub-committee
of the Northern Ireland Authority for Energy Regulation; it will be
mirrored in the Republic by the Commission for Energy Regulation
committee, which will be a sub-committee of the CER. In practice, the
two committees will have the same membership and will function as one
to co-ordinate regulation across the two jurisdictions. The two
committees will cometo the same decision in each jurisdiction
and each regulator will collectively have one vote, as willthe
independent member. Each regulator will be responsible for implementing
the decisions of the SEM committee in its part of the island. That is
the ingenious way in which the problem that my hon. Friend raises has
been dealt with in the legislation, and I see no reason why it should
not operate well.
Articles 11 and 12 clarify the
effect of the draftorder on certain agreements between licence
holders and provide for certain minor or consequential amendments.
Articles 9 and 10, which I should have mentioned before articles 11 and
12, provide for the imposition of the new SEM-related duties on the
Department, the authority and the SEM committee when carrying out their
functions in relation to the SEM. I hope that I have given the
Committee some sense of what the draft order
does.
5.2
pm
Mr.
Robertson:
Welcome to the Chair, Lady Winterton. I made a
point of order and we had some debate earlier about the wisdom of
implementing this legislation via statutory instrument. I think that it
is unsatisfactory so to do. The Minister is in a difficult position
because, as the hon. Member for Thurrock mentioned, there is the
question of similar legislation being enacted in the Republic of
Ireland.
Andrew
Mackinlay:
It is
enacted.
Mr.
Robertson:
Indeed. We are not setting up one system as
such; we are having comparable legislation in both
jurisdictions.
This
is a difficult matter. We are only two weeks, or perhaps less, away
from getting the Assembly up and running, although I do not know that
that delay makes all that much difference. I have a good relationship
with the Democratic Unionist party, the Ulster Unionist party, although
we often vote differently, and indeed with the Social Democratic and
Labour party, and I do not want to be over-critical of the Northern
Ireland political parties. However, it is regrettable that
Conservative, Liberal Democrat and Labour Members have given of their
time to discuss such an important Northern Ireland matter, yet there is
no representation here at all from the Province. Such a situation
undermines this place. I have complained about SIs before, but today I
feel particularly strongly.
Adam
Afriyie:
Does my hon. Friend share my concern that there
could well be a case for the Northern Ireland Assembly, when it
convenes in three weeks’ time, challenging
some of the statutory instruments that have been brought to the House,
considering that there are sometimes no Northern Ireland Members
present?
Mr.
Robertson:
My hon. Friend has a good point. I have no idea
whether Northern Ireland Members agree with the measure: they might be
in complete disagreement. We are trying to discuss the measure without
any input at all from the Province. I think that it is a good measure
and that it sets things off in the right direction, but I do not live
in Northern Ireland.
Having had my rant—I
feel strongly about the matter—I want to pick up a point that
the Minister made. She referred to the privatisation of the industry.
The present Government rightly introduced NETA, which changed to BETTA
and now cover Scotland. Both moves were right, as they led to a big
fall in electricity prices for consumers in this country, although for
global reasons those prices are now edging up. That fall happened
because the long-term contracts, although they still exist, were
largely changed. People traded electricity rather like they trade
shares on the stock market. The system was so online, and enabled such
finger-tip control, that the price of electricity fell. That system
does not exist in Northern Ireland. That, rather than what the Minister
says, is the explanation for the difference. I understand that many
long-term contracts for the supply of electricity, not to the household
but from the producer to the supplier, will remain in place. If that is
the case, it will be some time before consumers in Northern Ireland
benefit from the change. That is the central point—they will not
get the benefit if long-term contracts are still in place.
We have mentioned that there is
comparable legislation in the Republic. Will the Minister confirm that
we are setting up two regulatory systems that are similar, or maybe
identical? We need to be clear on that. Are we setting up regulatory
systems or a single market? The two are very different.
My hon. Friend the Member for
Wellingborough made a good point when he asked about the European
situation. I was a little disappointed with the Minister’s
response given that only an hour ago the Prime Minister said about the
situation in Europe that:
“It is true that we
still need to do more, especially in respect of the vertically
integrated energy companies.”
My hon. Friend is absolutely right; the
European situation is a big problem. The Minister is right to say that
the market in Ireland will still be relatively small. We need to
consider creating a UK-Ireland energy market. That is not impossible.
It cannot easily be done—these things are never easy—but
that is where we should be looking. We should also consider a
Europe-wide energy market. I am the last person to offer Europe any
sovereignty—we have given it far too much, and we ought to bring
it back—but surely energy trading is what Europe is supposed to
be about. Trading is what Europe is supposed to be about. The things
that Europe is supposed to be about are the things that we do not have.
Even the Prime Minister has recognised that.
If we are to enable consumers
in Northern Ireland to benefit from the changes, we must end the long
contracts, create arrangements like those in Great Britain, and
consider integrating the all-island market with the United
Kingdom’s and probably with Europe’s. That has to be the
way forward. I accept that
that is beyond the scope of the order, and so before you tell me I am
out of order, Lady Winterton, I shall move on.
May I ask a technical question?
When it was first raised with me, I found it somewhat amusing but it is
important if the Government want to make use of renewable energy. I
understand that the Republic lays claim to the sea bed around the whole
island. It might seem fanciful, but if tidal power or—heaven
forbid—windmills out at sea are to be depended on, it is
important to deal with that.
Although this is a limited
order, I accept that it is moving in the right direction, so I shall
support it.
5.9
pm
Mr.
Alan Reid (Argyll and Bute) (LD): It is a pleasure to
serve under your chairmanship today, Lady Winterton.
I welcome the order. A single
electricity marketfor Northern Ireland and the Irish Republic
has the potential to bring many benefits to consumers and the
environment. Greater competition between different suppliers should in
the long run, through market forces, help to bring down prices and lead
to greater fuel efficiency at generating stations, thus
benefitingthe environment. Also, a large number of different
generators feeding electricity into the grid should mean less frequent
interruptions to supply, since there will always be other generators
ready to step into the breach in the event of a failure at any one
power station. A greater number of generators will also make routine
maintenance easier to schedule. Those are clear potential
benefits.
There is one
question that I want to raise with the Minister. Although we will have
a single electricity market for the whole of the island of Ireland, and
that market will be regulated, Northern Ireland and the Irish Republic
will still each have their own separate policies and practices in such
areas as carbon emissions trading schemes and support mechanisms for
renewables. It seems clear that differences in those schemes have the
potential to distort the all-island trading, and could give competitive
advantage to companies operating in one jurisdiction or another. For
example, if one jurisdiction decided to impose a regulation that
electricity companies had to generate a certain proportion of their
electricity from renewables but there was a different percentage figure
in the other jurisdiction, clearly that could give an advantage to
companies operating in one jurisdiction. Will the Minister explain how
the Government envisage that the drive to encourage generation by
renewables will work when we have one competitive market but different
sets of rules on support for renewables on either side of the
border?
5.12
pm
Andrew
Mackinlay:
Consideration of the order and its contents
cannot be separated from the time scale in which it has been before
Parliament. As for attendance in Committee, if we are charged with
providing scrutiny and accountability, it is not unreasonable for
Members of Parliament to say that in this case—as in many
others, but particularly now—the process is seriously flawed.
What I want to say does not reflect on
the Minister, but I shall not hold back in my criticism of a system
under which members of the Committee, if they share my experience,
became aware of their membership only on Friday evening.
The Department concedes in the
explanatory notes that, but for the special arrangements for Northern
Ireland, the order would be primary legislation. We are familiar with
the criticism that we do not deal with primary legislation in one and a
half hours. I accept that extraordinary arrangements have to be made
for Northern Ireland, but for primary legislation some notice is given
and hon. Members who specialise in the subject are involved. By natural
selection, as it were, they contribute on Second Reading, and those
with other specialisms tend to abstain. The members of this Committee,
who are supposed to scrutinise the statutory instrument, may know
nothing about electricity, but we see it as our duty to provide
scrutiny and accountability in this place, none the less
The arrangements by which many
of us must consider the measure at short notice are woefully
inadequate. I have criticised Northern Ireland
Members in the past, but I do not think that they can be criticised for
not being here. According to the Bible, the Almighty was able to be in
two places at once only on one occasion. We expect those Northern
Ireland Members to do it week after week, and it simply cannot be
done.
If you think
that I am over-egging it, Lady Winterton, may I ask you to look at the
explanatory notes? It says that some of the delay has been due to a
question of vires—whether the order could be introduced under
the Northern Ireland Act 2000. It seemed to me, from reading between
the lines of the notes, that some diligent person in the Department
said, “Whoops, hang on a moment, we may be in trouble
here.” I think that some panic set in, and people found that
they would have to embrace the provisions of the Northern Ireland
(Miscellaneous Provisions) Act
2006.
It is not
unreasonable, given that I had to travel to get here, that, despite the
issue of vires being the kind of thing that fascinates me, I have not
been able to study the relevant pieces of legislation since Friday. We
cannot be certain even now that the order is competent in that
respect—I have certainly not been able to examine it. I do not
think it unreasonable that legislators should be given adequate time to
consider proposed measures.
After all, it is not
unprecedented for legislation emanating from the
Northern Ireland Office or otherwise relating to Northern Ireland to be
substantially flawed. I once challenged a piece of legislation in this
very Committee room, and it had to be taken back because it was
flawed—that is just my personal experience. I notice that
members of the Bar and learned Members are present in the Committee.
Had they been given time, they might well have found deficiencies in
the order, so time is a valid matter to which to draw attention. I
fully accept that the legislation is necessary—I welcome
it—but it is unreasonable that significant and important
measures should come to us in such a way.
I want to ask a few questions.
I understand that there will be two regulators—one for the
Republic of Ireland and one for Northern Ireland. However, again
because
of lack of time—I cannot repeat the point often enough—it
is not clear to me how any differences between them will be resolved.
It might well be that common sense will prevail and that the regulators
will have community of purpose and interest and reach the same
conclusions. I hope that that will happen, but we cannot be certain of
it. It is not clear to me where the order sets out a mechanism for
dealing with disputes—or, indeed, whether such a mechanism is
provided.
I notice
that, according to paragraph 42 of the explanatory notes, the authority
is charged with protecting the interests of gas consumers in Northern
Ireland. However, the order does not elaborate on how, why, and to what
extent that should happen. Will the Minister amplify on that
too?
Another point has
been touched on, perhaps unintentionally, by the Opposition spokesman,
who referred to some of the territorial, historical and constitutional
matters. That reminded me of the fact that the boundaries of County
Londonderry are still a matter of dispute with the Irish Republic. That
factis not unimportant to energy renewables and environmental
impact. The United Kingdom holds that the boundaries of Londonderry go
to the western banks shoreline of the Foyle, but I think it goes
without saying that the Irish Republic would not agree. It would say
that the line is a dotted line down the middle of Lough Foyle. I do not
pretend to know the answer to that point, but I mention it because the
single energy market will result in sources such as wave power and wind
turbines being considered. We need to take into account the location of
such installations and their impact on waterways, as well as on the
critical and fragile life that such waterways
contain.
I notice that
the order refers to various bodies—I think that they are
described as the Department, the authority and the
committee—that are charged as one would expect with having
regard to the environment. I am concerned that, in the zeal to ensure
energy supply and to produce energy and electricity within the island
of Ireland, there may be cutting of corners with respect to the
environmentally disadvantageous impact of things that at first glance
might seem environmentally friendly. Certainly hon. Members and I wish
to encourage wind turbines as a matter of broad policy, but they can
have a seriously detrimental effect on the beautiful landscape of
places such as Ireland. Some evidence also suggests that wind turbines
placed in the wrong area can detrimentally affect stocks of fish and
other marine life. The order does not spell out adequately the duties,
responsibilities or need for environmental impact assessments, or how
we will resolve differences that relate not necessarily to the
regulators but to the legitimate interests of the two
jurisdictions.
The
third point that I want to explore with the Minister is this. As I
understand it, we have one interconnector between the mainland United
Kingdom and Northern Ireland, and there is to be another, either from
England or from north Wales, that will probably interconnect with the
Republic of Ireland. That must be very welcome to consumers, whether in
Ireland or the mainland UK, but it raises a question. Surely we are
talking about a single market for electricity not for Ireland but for
the British Isles. As electricity—some of it, incidentally,
produced by atomic energy—comes
from the mainland, how will it be regulated, not just between the two
regulators in the order but between the markets of the British Isles?
That is not at all
clear.
Paragraph 14 of
the explanatory notes says that amendments were made to the draft order
during the consultation period. I wish that the notes had amplified on
those amendments so that in the brief time available to study the
order, one might have had some appreciation of the work
involved.
The way that
we deal with statutory instruments is a charade. There was a point of
order at the start of the Committee, and subsequently I spoke rather
testily, but what I do not understand about the administration of the
Northern Ireland Office is why everything that is done must be done
urgently. Actually, I fully accept that. I do not think that hon.
Members of the Opposition are probably fully aware of this—I do
not mean that as a criticism in any way—but there is now a case
for urgency. Apart from anything else, it is politically embarrassing.
I understand that in Dublin today, the Republic’s Government
produced an energy White Paper. In a phone call that I made earlier, I
was told that the Irish Republic expected the measures to be in place
by May. However—I am open to correction, as the Minister has no
doubt read it—the White Paper said that they should be in place
by June, not November. The November date that she mentioned will be
news to our friends in the Irish Republic. In any event, I am fully
seized of the need for
urgency.
I
have a complaint about the Northern Ireland Office. I know that we have
different legislative processes, but the Irish Parliament mirrors the
Westminster system—more so than many Commonwealth Parliaments.
The Dail Eireann gave the legislation Second Reading and Committee
consideration, as did the Senate, and it received presidential assent.
It is on Ireland’s statute books. We, however, do not have to go
through that, so we could have passed the legislation a lot quicker.
But we did not do it a lot quicker; instead, we are doing it at the
last minute. I cannot understand why.
The Northern Ireland Office
does this time aftertime after time. Ministers inevitably
stand up dutifully to defend their loyal civil servants, but somebody
somewhere in the Northern Ireland Office is tardy. I just look forward
to the time when the Legislative Assembly does meet in Belfast.
Presumably some socks will have to be pulled up. There has been a lack
of scrutiny for 25 years. They have been slow and sloppy. The draft
order is just one example of that
today.
The Minister
will no doubt say, “My hon. Friend is unfair,” but I do
not think that it is unfair. There is no reason why adequate time could
not be given to enable everyone to study the order. Perhaps some
Members who know about electricity—I do not lie awake at night
thinking about it too much—could have volunteered to be on the
Committee and contributed to the debate. I am a little concerned about
that.
I hope that the
Minister will answer my specific question about gas consumers.
Reference is made to them in the order and I should be grateful if she
could expand upon that and on how any differences that may exist
between the two regulators will be
resolved.
5.26
pm
Mr.
Bone:
It is a great privilege to serve under your
chairmanship for the first time, Lady Winterton. It is
also a great privilege to follow the hon. Member for Thurrock. I did not
disagree with him in any way; he put the case far better than I
can.
I am not getting
at the Minister today, because it is not her fault, but Northern
Ireland legislation is rushed. The last time that happened was when the
sexual orientation regulations were debated before the Joint Committee
on Statutory Instruments met. When it did meet it drew attention to the
fact that there were seven faults in the instrument. It seems to me
thatsuch rushing is a real problem. Can the
Ministertell us whether this instrument has gone to the Joint
Committee or whether it was
exempted?
Maria
Eagle:
It has, and the Committee made no
comments.
Mr.
Bone:
I am grateful to the
Minister.
Will the
Minister tell us the make-up of the SEM committee? Is it 50:50 from the
Irish Republic and Northern Ireland? What happens if there is a
dispute? If, say, the Government in Northern Ireland decide that they
do not like it, what sort of role do Governments have in challenging
the SEM committee?
On
the European Union, I thought that we had common ground on both sides
of the House about the energy market. The real problem is the fact that
the EU refuses to follow what the Government are doing in the United
Kingdom. Our industry was paying twice as much for wholesale energy
only last year because of the EU’s failure to liberalise. I am
not trying to make a party point here, because we have unity on the
issue. How will the Government tackle the matter, however? Our
consumers and our industry are losing out as a
result.
Finally, I
want to take issue with the Minister over the scheduling of
today’s debate. I know how hard-working Northern Ireland Members
are. They always attend Committees when Northern Ireland business is
being discussed. Clearly there must be some very good reason why no
Northern Ireland Member is present. I do not accept that it is up to
hon. Members to turn up. We have a very special situation in Northern
Ireland where we are passing laws in this Committee that would normally
be debated by a Parliament,and it is up to the Government to
ensure that their timetabling allows Northern Ireland Members to be
here.
You can call me
suspicious, Lady Winterton, but I think that the Government may have
picked this dayto rush through the measure because they knew
that Northern Ireland members could not be here. I might be entirely
wrong, but because the Government scheduled the sitting when Northern
Ireland Members cannot attend, we have a right to be suspicious. That
is the fault of the Government. The Minister’s rolling her eyes
at me will not change my view.
Angela
Eagle:
I am not sure whether the hon. Gentleman has spent
any time in the Whips Office during his tenure in this place. If he
had, he would know how such things are scheduled. It is not
usualto give individual Back Benchers a veto on when
Committees meet. He might like to explain how on earth we could run
Parliament with such a process in place.
Mr.
Bone:
That would be entirely true in normal circumstances,
but we are debating Northern Ireland legislation. I believe that
elections were held in Northern Ireland recently.
[
Interruption.
] If the Government take the view
that Northern Ireland legislation should be pushed through the House
without Northern Ireland Members present, I believe that they are
totally wrong.
Maria
Eagle:
The hon. Gentleman is putting words into the mouth
of someone who has been sitting down, but Northern Ireland Members knew
last Wednesday when this debate would be
held.
Mr.
Bone:
So they found out only last Wednesday; that is not a
lot of notice, which rather proves my point. Did the Minister speak to
those hon. Members to find out whether there was a reason why they
could not attend today? Could the debate not have been scheduled for
another day? Or does she just not care?
Maria
Eagle:
It is not my practice as Minister to ring the
members of a Committee to ask whether they will attend. They are
informed, as I am, about the timing of debates, and one hopes that they
have it mind to turn up for parliamentary debates on issues about which
they have some interest and concern. As I said earlier, it is not for
me to tell people whether they should be here.
Mr.
Bone:
We will simply have to disagree. I believe that a
special case can be made for Northern Ireland business, as we are
making decisions that would normally be made by an Assembly or a
Parliament. The Minister should have organised the debate through the
usual channels so that those Members could have been
present.
Maria
Eagle:
Will the hon. Gentleman give
way?
Mr.
Bone:
No, I have had enough; I shall not give
way.
The only slight
concern that I have now is that if all hon. Members are the same, why
did Northern Ireland Members know about the debate on Wednesday, while
hon. Members such as me did not find out until
Friday?
5.32
pm
Maria
Eagle:
May I ask you for advice, Lady Winterton? I am not
sure whether the hon. Gentleman is seated or inviting me to
intervene.
The
Chairman:
I had the impression that the hon. Gentleman was
sitting down and had ended his remarks.
Maria
Eagle:
I am happy to respond, Lady Winterton.
We have had a lively debate,
albeit in the absence of some members of the Committee. I will do my
best to deal with the points that have been
raised.
The hon.
Member for Tewkesbury expressed some strongly held concerns, which were
reflected in the remarks of other hon. Members, including those of my
hon. Friend the Member for Thurrock, about the way in which we deal
with Northern Ireland business that should technically be devolved at a
time of direct rule.
As a direct rule Minister, I of
course understand the concern among Committee members and across the
House, and in the other place, about using Orders in Council to deal
with devolved matters. It is not something that the Government wish to
see continue. We have made clear efforts to restore devolution, and we
continue to do so. We have every hope. We are very optimistic about the
fact that devolution might be restored in the next couple of weeks, at
which point these issues will not be of such great concern.
I remind the Committee that,
because of the concern across the House and in the other place about
the Order in Council procedure being undemocratic, we have made it
clear that if devolution is not restored by 26 March—we all hope
very much that it will be—we will introduce measures to make
direct rule more accountable. We have committed ourselves to do that in
the event of such a failure. We have said that we will move quickly to
introduce such measures. However, we are not focusing on that at
present; we are focusing on getting devolution restored. That is the
No. 1 priority for those who care about the future of Northern Ireland.
We very much hope that that will not be an issue after 26 March,
because devolution will indeed be restored. That is what we are
focusing our effort on
now.
Of course, we are
now in the short period between the end of the elections and,
hopefully, devolution. We hope that this will be the last hurrah for
those who have concerns about the democracy or otherwise of the Order
in Council
procedure.
Mr.
Robertson:
I entirely agree with the Minister’s
objectives. However, she will be aware that another statutory
instrument is coming up, although I am not sure of the date. I suppose
that that is plan B, as it will extend the ability of the Government to
run Northern Ireland by statutory instrument should the Assembly not be
up and running. Why is that statutory instrument going to introduced
when the Government have assured us that if the Assembly is not up and
running, they will find a different way of governing Northern Ireland?
I am rather confused about their approach.
Maria
Eagle:
The hon. Gentleman refers to the modification order
to extend the powers to make legislation by Order in Council. I assure
the Committee that that order has been laid purely on a contingency
basis. We fully expect, hope for and wish devolution to be restored on
26 March and the Northern Ireland Act 2000 to be repealed on 28 March,
with its Order-in-Council-making power. However, we have to bear in
mind the fact that there are circumstances in which it might not be
restored. In such circumstances, the Assembly will be dissolved and
there will be an
extended period of direct rule. The parliamentary calendar dictates that
in those circumstances there will not be enough time after 26 March to
lay and debate the modification order before the power expires
on14 April. As a result, we have no alternative but to lay
that order. However, that is purely a contingency, and we hope, as I
have repeatedly made clear, that it will not arise or need to be
mentioned again after 26 March.
Mr.
Robertson:
Will the hon. Lady give
way?
Maria
Eagle:
I can hardly say any more than I have already said.
I am stressing the point as much as I possibly
can.
Mr.
Robertson:
The Minister did not address the point. Of
course, some arrangement has to be in place. However, the Government
have assured us that they will look into governing Northern Ireland in
a different way, not by statutory instrument. Why are they going to
introduce an order that will continue the practice for the next six
months in exactly the way in which they have said that it would not
continue?
Maria
Eagle:
It does not take a genius to work out that we will
then need to debate with those with an interest in the matter the best
way of taking forwardan alternative arrangement in the very
sad event that devolution should not be restored on 26 March. It would
not be right for us to have a gap in powers in the interim.
Now, rather than spending our
time talking to interested parties about what will happen in the event
of failure of devolution on 26 March, we are focusing our efforts and
attention on making sure that devolution gets up and running. The order
is, therefore, purely a contingency to ensure that there is an ongoing
power to legislate if such be needed. If devolution fails on 26 March,
we will immediately turn our attention to consulting about making
better arrangements for more accountable direct rule. It would not be
right for us to direct the efforts of civil servants who are currently
spending their time trying to ensure that devolution works to talking
about what would happen in theevent of failure. That is the
situation, and the hon. Gentleman should not see it as sinister. We are
merely ensuring that there is no gap in the capacity to legislate, just
in case legislation is needed in the interim. We hope that devolution
will be restored and that we can all cease discussing accountability
for Northern Ireland legislation in this place, because it will be
taking place where it should—the Assembly.
The hon. Member for Tewkesbury
and a number of his colleagues have asked why the order could not be
left for another few weeks until the Assembly wasup and
running. The regulatory impact assessment highlighted several areas in
which benefits would be lost if there were a delay in establishing the
market. Those included variable cost savings, avoided costs of
redundant market operator systems and avoided transmission costs. We
have already seen a four-month delay, which estimated to have cost the
regulators and system operators some £10 million. We are talking
about large amounts in the case of a delay. While I understand the
concerns that hon. Members on both
sides of the Committee have articulated about why on earth we are doing
this just ahead of what we hope will be restoration, I hope that they
will give credence to the additional costs that would be incurred were
we not to go ahead as we have
planned.
The single
electricity market legislation needs to be in place early enough to
underpin implementation of the new systems and procedures from June, in
advance of the go-live date of 1 November. That is the key to why we
need to go
ahead.
Adam
Afriyie:
I thank the hon. Lady for being so generous in
giving way. She mentioned the cost of delay. If we were to delay for,
say, 14 days, what does she estimate the costs would
be?
Maria
Eagle:
Unfortunately, it is not quite so simple. The delay
would probably not be 14 days if we did not take through the
legislation and waited for the Assembly hopefully to get up and
running. The delay would probably push the start of the electricity
market back to next April at the absolute earliest. We are talking not
about a 14-day delay, but about a much longer delay; at best, it would
probably be a number of months. We have already seen increasing costs
that will be visited upon regulators, generators and industry players
in the market as a result of the delay in respect of the technical
issues involved in designing the market and making sure that it
works.
I assure
members of the Committee that there has been very broad support since
1999 for the single electricity market. More particularly, since 2004
when the proposals were put forward, there has been
extensive consultation among industry players, consumer organisations
and Northern Ireland parties. The broad support across all parties has
been based on the market bringing mutual benefits to consumers north
and south. That is not to say that questions have not been asked. Of
course, there have been questions about whether it will work as well as
it should and about the technical
arrangements.
Angela
Eagle:
Is my hon. Friend surprised to hear the main
Opposition party arguing for increasing uncertainty and possible
increases in costs being visited upon
business?
Maria
Eagle:
I must say that I am a little surprised, but there
we are. We cannot tell what the Opposition believe these days. No
doubt, we shall work it out in due course as they gradually produce
their much-awaited policies. I shall certainly not stand here and argue
for the imposition of millions of pounds of extra costs on industry
players and consumers in the north and south.
[
Interruption.
] The hon. Member for Tewkesbury is
chuntering away. I have repeatedly given way to him. If he wants to get
up again, he can do so. Clearly he does
not.
There has been
wide-ranging consultation, including with political parties throughout
Northern Ireland. While there have been questions about whether the
proposal is the best design for the market and so on, there has been
wide-ranging support for it. It would be fair to say that the DUP has
been sceptical about some aspects of the single market, but even it has
stated that,
when north-south co-operation brings clear benefits to Northern Ireland
consumers, it will not stand in the way of that co-operation. I hope
that all members of the Committee can accept that the measure is in the
interests of consumers north and south and that it is something worth
doing.
The hon. Member
for Tewkesbury referred to long-term contracts. Some can be potentially
cancellable in 2011-12. That is the first time that they can be
cancelled following privatisation. Competitive markets are required to
be in place before they can be cancelled, otherwise it would not be to
the benefit of Northern Ireland consumers to cancel the contracts and
put security of supply at risk. I argue that it is important to have
the competitive market ahead of the potential for cancelling the
long-term contracts. If it is in place, we will not run into potential
hikes in costs to consumers or threats to security of supply as a
result of cancellation of the contracts in
2011-12.
The single
electricity market will create conditions and offer
opportunities for Northern Ireland consumers to access more competitive
generation. At the same time, we need more interconnection to enable us
to do that. I make that point to the hon. Member for Tewkesbury in
respect of tapping into the more competitive arrangements in BETTA and
NETA. We hope that the second north-south interconnector and the
east-west interconnector between Dublin and Wales will be up and
running by 2011-12. That ought to facilitate more competition and a
better deal for consumers north and
south.
The hon.
Gentleman also made a point about the Irish claim on territorial
waters. The Republic certainly makes a general claim on territorial
waters and seabeds. However, in respect of the proposed offshore wind
farm at Tunes plateau, for example, there is some co-operation between
the north and south to try to secure an agreement with the Irish
Government to license and share responsibility for that area without
prejudice to either side on jurisdiction. Rather than getting caught up
in a huge fight about who owns the seabed on the basis of more general
legislation in the south, we would rather make pragmatic agreements
about mutual benefits from
renewables.
That
relates to the point that the hon. Member for Argyll and Bute made
about renewables. The potential for new generation in Northern Ireland
through renewables is quite enormous, partly because of the potential
for wind and wave power. Some 1,000 MW of wind power applications are
currently in the planning system in Northern Ireland, which would
represent£1 billion of new renewable energy investment.
It is important that the arrangements for the new single market
encourage the regulators who run it to focus on the importance of
diversity of supply, away from the traditional coal, gas and oil-fired
stations that currently exist in the south and in Northern Ireland
andmore towards renewables. There is great potential. The
regulators administering the market will have to have regard for
diversity of supply and for ensuring that there is more scope for
renewables.
The completion of the second
north-south interconnector also offers opportunities for existing
conventional Northern Ireland generators to expand
the capacity of their plants and to diversify the supply from which they
can produce electricity. Once the interconnection is in place, the
potential desirability of building renewables plant in Northern Ireland
will be positive. The potential exists for further co-operation on
renewables within the single market, to maximise the contribution to
generation. Up to 30 per cent. of electricity on the island could come
from renewables. That must be welcomed, given the current dependence on
gas and coal-fired stations on the island of Ireland. I hope that the
hon. Member for Argyll and Bute will accept that the single electricity
market and the way in which it will be run and regulated will provide a
further boost to the potential for
renewables.
Mr.
Reid:
Part of the concern is that there could bea
market disadvantage if one of the jurisdictions said
that a certain proportion of electricity had to be
generated from renewables but the other took a separate decision. Will
the regulator in the joint committee have the power to dictate to both
jurisdictions that a certain proportion of the electricity needs to be
generated from
renewables?
Maria
Eagle:
No; the regulators have to have regard to diversity
of supply and to ensuring that the way in which the market is run
enables renewables to play a part. The regulators do not set
percentages. National policy, south and north, will still lie with the
national Governments. The hon. Gentleman needs to remember that the
regulators are independent of Governments. The regulators certainly do
not make policy, but they have to have regard to the policy, which the
north and the south both have, to try to expand the capacity of
renewables to contribute to energy supply in the future. There might
well be different renewables regimes in the north and the south, both
with the hope of increasing the supply from renewables, but it is not
for the market regulators to make a judgment about what the percentage
ought to be.
The
environment and renewable energy funding—the Secretary of State
for Northern Ireland has set aside some £59 million—will
enable us to bring forward three or four significant energy-from-waste
proposals, which, after the pilot phase, will offer opportunities for
local investment in heat and power from agricultural and municipal
waste and from wind and wave power. It might well be that, for a
period, Northern Ireland will have a significant advantage as a
location for the generation of renewables. The market will not be
responsible for policy making; it will merely have regard to our need
to diversify and promote renewables
generally.
My hon.
Friend the Member for Thurrock made clear his disapproval of the
arrangements for the scrutiny of Northern Ireland legislation. I heard
what he said. On his vires points, I should like to draw to his
attention—he has read it, because he referred to it—the
explanatory memorandum, which says that there was a vires issue, which
struck officials and those who worked on the legislation. As a result
of the caution of officials, who wanted to ensure that there was not a
vires problem, a provision was inserted into the Northern Ireland
(Miscellaneous Provisions) Act 2006, on which the hon. Member for
Tewkesbury remarked during his contribution at the time. It would have
been possible to assume that the vires was okay and to go ahead with
the order on the basis of the Northern Ireland Act 2000, but that would
have left a small question mark. That the order was delayed to place a
provision in the primary legislation is indicative of the extreme care
that was taken to ensure that the vires is correct. The Lords Merits
Committee and the Joint Committee on Statutory Instruments have now
considered the order and are content that it is competent. In that
sense, we may say that delay has led to much more certainty about
vires. I hope that I have satisfied my hon. Friend in respect of the
points that he made on the
matter.
My hon. Friend
asked a number of questions about the two regulators and the
differences between them in the way that they will operate and resolve
disputes. The Department, the Northern Ireland Authority for Energy
Regulation and the SEM committee will be under a duty, as will their
counterparts in the south, to carry out their functions in accordance
with best regulatory practice. Their function is to regulate the market
as it will be. It is modelled on the duty imposed on the Northern
Ireland Authority for Utility Regulation and the gas and electricity
functions of the Gas and Electricity Markets Authority in Great
Britain. Primarily, the regulators will carry out a regulatory
function.
On the issue
of whether Governments north and south can interfere in the work of the
SEM committee to protect domestic interests, both Governments have
sought to ensure independent regulation of the single electricity
market. The Department will retain its existing consent functions in
relation to the granting of licences and the modification of licence
conditions. In carrying out their functions, the Department, the
authority and the SEM committee will be required to have regard to the
need to avoid unfair discrimination between consumers north and south,
as will the CER and the SEM committee in the south. The committee will
not interfere in non-SEM domestic electricity matters. Its powers will
extend only to the regulation of single electricity markets; it is not
going to interfere in anything else. Excluded domestic functions are
set out in article 6(5).
The quite ingenious way in
which the committee works is that the sub-committee of each
regulatorwill have the same people on it, so that, although
technically and legally there will be two different
sub-committees—one in each jurisdiction—they will have
the same membership. Therefore there will be one decision-making
process. The regulators, north and south, will then implement the
decisions of the committee for the best regulation of the market. One
hopes that that will work in a quite positive
way.
The Department is
not required to approve the working arrangements between the authority
and the SEM committee, because the authority is an
independent body whose existing working arrangements do not require our
approval, so there will not be political interference from Ministers
north or south in the way the arrangements work. However, as a
corollary, the committee will be there purely to regulate things that
relate to the market. It will not extend its powers, functions or
efforts beyond that.
As to the environmental impact
of renewables, the order does not make any change to
the existing safeguards on environmental protection. Both Northern
Ireland and the Republic will operate within their existing planning
and environmental protection legislation, in their respective
jurisdictions, and the order will make no change to that. My hon.
Friend also asked why gas consumers were covered. The order provides
for the protection of the interests of gas consumers because of the
importance of gas as a main source of fuel for electricity generation
in the north.
The
hon. Member for Wellingborough made points similar to those of other
hon. Members about the order being rushed. There is little more that I
can say about that, and we may have to agree to
disagree.
Adam
Afriyie:
I thank the Minister for being so generous in
taking interventions. I want to press her a little further about the
price of delay. She mentioned that there was potentially a £45
million saving to be made in Northern Ireland. I do not know where that
figure comes from. With a population of 1.7 million that is about
£26 per person. If that is spread over a 10-year time
frame—I assume that there would be a gentle drip
through—that is £2.60 per year per person, so once again
I ask the Minister to explain the difference that will be made by a
delay of 14 days, or even several months, which she may argue is the
case. It seems that it would be about 20p per month per person in
Northern Ireland. Is that
correct?
Maria
Eagle:
No; I do not want to be unpleasant to the hon.
Gentleman, but that is a simplistic way of looking at the matter. The
costs of delay are not simply a result of putting things back, or
failing to acquire as quickly as possible the net present value of the
benefits that the market will bring. The single market is a big change
for electricity generators and industry players, so they all incur
costs in getting ready for implementation, which would be multiplied by
our delay. There are thus other costs of delay. I referred to some of
them earlier. It is not simply a question of putting off the benefits
of the single market if we delay.
I cannot accept that
two weeks would be the entire extent of the delay. We would probably be
dealing with a minimum delay of several months, during which the
industry that had been planning to operate in a single market would
have to incur the costs of continuing to operate the current
arrangement. It is too simple to say that all that would happen is that
the benefit would be put off for a couple of weeks. I do not accept
that that would fully encapsulate the cost of the delay of not
proceeding with the
order.
The hon. Member
for Wellingborough made some points about the independence of the SEM,
and I think that I have already covered those in responding
tomy hon. Friend the Member for Thurrock. He also, along with,
I think, the hon. Member for Tewkesbury, accused the EU of failing to
be sufficiently robust in its own liberalisation. I am not going to
stand and argue; the EU has been as liberal as it could have been, as
fast as it could have been. However, there is certainly a clear
direction from the EU towards liberalising and creating regional
markets and eventually an all-EU market for electricity.
There is increasing pressure
from Brussels for pro-competitive measures and separation of vertically
integrated energy utilities. Obviously, such measures cannot be
achieved quickly or cheaply, otherwise
mistakes can be made, and certainly the Opposition have experience of
that happening. However, there is no doubt about the fact that the
single electricity market is at the forefront of moves across the EU
and it is a progressive move at the leading edge of market development,
to open out and extend markets from an all-island basis to a regional
basis. That is a process that we can be pleased that we are at the
forefront of, and it will benefit consumers in due course. On that
basis, and having tried to answer the question that was put to
me—
Mr.
Bone:
I am sure that the hon. Lady did not mean to avoid
my question, but I asked about the make-up of the SEM committee. She
explained how it worked, but what is the original make-up? Is it 50 per
cent. from the Republic of Ireland and 50 per cent. from Northern
Ireland? How do those important members get chosen?
Maria
Eagle:
It would be an equal number from north and south,
plus an independent member; I think
that there are three from the north, three from the south, plus an
independent member. Schedule 2 provides for the authority’s SEM
committee to include up to three persons from the CER—the
southern regulator—and the same number from the north, plus an
independent regulator. The committee is one committee in practice,
although technically—legally speaking—it is two
committees, in order to ensure that there will be only three votes: one
from the north, one from the south and one for the independent member.
That is to try to ensure that there is no advantage one way or another.
I hope that that satisfies the hon. Gentleman.
I am sure that people have
heard enough from me, so on that point I commend the order to the
Committee.
Question put and agreed
to.
Resolved,
That the Committee has
considered the draft Electricity (Single Wholesale Market) (Northern
Ireland) Order
2007.
Committee
rose at two minutes past Six
o’clock.
