Q
29Charles
Hendry: May I explore that a bit further? Are you saying
that you believe that the nuclear installations inspectorate does not
have sufficient numbers of skilled people to assess reactor proposals
of the types that are being submitted to them? And is it a general view
within the industry that, if it wanted to invest in and build nuclear,
there is enough information out there to make decisions on the cost of
carbon, the waste disposal regime and the assessment
procedures? Roger
Salomone: My understanding is that those views have
been expressed, at the NII in particular, as an area where we might
need to have more staff—more expertise on board. It obviously
depends on how many proposals come forward; it will be dependent on
demand in that
sector. Paul
Noon: My union represents all the staff of the Health
and Safety Executive, including the Nuclear Installations Inspectorate,
and we have fought a long battle to try to improve the pay of our
members in the NII. It simply does not have enough people. One of the
reasons why it has not had enough people is that pay rates have been
uncompetitive. Recently there has been a significant increase in pay
for inspectors in the NII. My thought is, though, that that might stop
some people leaving rather than bring salaries up to the levels
needed to recruit, because the rates are still
behind what people can get in other sectors of the industry in the UK,
let alone what they could get if they chose to move overseas. So the
direct answer is that it is difficult to see the NII, as currently
formed, being in a position to properly discharge all the
responsibilities that it will need to discharge for new nuclear
licensing.
Q
30Martin
Horwood: On some of the decommissioning programmes for
nuclear and the new nuclear programme, the impact assessment that we
have just been given seems to have identified some alarming risks, and
one key concern is that there is still a risk that sufficient funds
would not in practice be available. In particular, in a company
undergoing a restructuring programme, the assets could be diverted and
made unavailable to fund the liability. Do both of you think that in
the end Government have to be the final guarantor of
the costs of nuclear decommissioning and clean-up? Is that the only
realistic option?
Stephen
Radley: The starting point is that the nuclear
industry should be financing itself and that we should be looking to
the nuclear industry to pay its full share of all the costs, including
operating, decommissioning and waste disposal. The sensible conclusion
is that, if facilities are only to be built some time in the future,
the costs cannot be predicted with absolute certainty. I do not think
that it is sensible, therefore, to try to bolt down the position
absolutely that there will be no taxpayer contribution to
this. Paul
Noon: From the TUC point of view, first it is right
that the regime should be set up in such a way that the industry is
required to pay those costs as a guarantee that it always will. As with
any other technology, however, there is bound to be a role for
Government if it does not. Everything possible should be done, however,
to structure it so that it does.
Q
31Martin
Horwood: How do you see the provisions in the Bill in
those terms? Do you think that it allows for the possibility that you
have both identified—that the nuclear industry should pay, but
as a last resort the Government could pick up the
tab? Paul
Noon: We do not have a view on that, so I cannot help
you.
Q
32Martin
Horwood: Does the EEF have a view on the provisions in the
Bill and how they allow or do not allow that to
happen? Roger
Salomone: The main safeguard is probably going to be
outside the Bill in the details of these decommissioning plans
regarding the risk premium. This is the idea that waste management
costs are to some extent unknown. We have not made specifications for
this waste-management facility. It seems prudent, therefore, to add a
premium to waste and decommissioning costs so that you minimize the
risk that the Government will have to pick up some liabilities in the
future.
Martin
Horwood: That is extremely
helpful.
Q
33Paddy
Tipping: Energy prices have been pretty low for a decade,
but now they are rising very steeply indeed and clearly that will have
consequences for trade unionists. There is little in the Bill about
fuel poverty. Should there be and what should it be?
Philip
Pearson: It is a kind of elephant in the room as an
issue because the increase in the number in fuel poverty back up to 4
million-plus is unacceptable. It is of great concern to the TUC. The
Bill should, in our view, make provision for the mandatory introduction
of social tariffs. There is no logic in the poorest in the country and
the elderly paying the highest energy prices through fixed-price
metering. We would want the Government to change position and give
themselves the option to regulate for the mandating of social tariffs
so that the big six energy companies know exactly what the minimum
threshold is.
We have a
minimum wage in this country. It is not a voluntary system that big
companies can opt in or out of. We think there should be a minimum
provision of social tariffs provided for in the Bill. In addition, we
think it would be helpful if the Government gave themselves powers to
introduce smart metering to accelerate the introduction of such
tariffs. Those two mechanisms will not deal with the income issue,
which is a major driver of fuel poverty, but they will significantly
help the payment issue for those on the lowest
incomes.
Q
34Paddy
Tipping: Does the EEF have a view on smart
meters?
Stephen
Radley: To some extent, we cannot come to a
full judgment on smart meters until the full cost-benefit analysis has
been done. That work is proceeding at the moment, and we are anxiously
awaiting the numbers. Without pre-judging what that says, we do see
smart meters as a big opportunity both to improve energy efficiency in
the homes where we have made limited progress so far and also in terms
of business opportunities for UK
companies. Depending
on what the numbers say, we need to look actively at how we can
encourage the deployment of smart meters. This may be in the form of
some kind of cost sharing between the suppliers and consumers. We
probably also need to look at the issue of overcoming the up-front
costs that would be involved in purchasing the smart meters, if it fell
on the consumer. We are open-minded to some extent because the
economics are still uncertain, but this is something the Government
should be looking at very
actively.
Q
35Mr.
Hugo Swire (East Devon) (Con): What is your view on
security issues? We hear a lot about security of supply from overseas
countries, and our exposure to destabilisation in that respect. Is
there enough in the Bill to address the concerns about a
decommissioning programme, a nuclear build programme and a uranium
enrichment programme, to say nothing of offshore renewable farms and
oil and gas pipelines and so forth? What is your view of the security
aspect of all this?
Paul
Noon: Our main concern has been about over-reliance
on imported gas. That has been a feature of submissions that we have
been making for some time. There seems to be more recognition of that
as an issue, although I could not say whether it is fully reflected in
the Bill. One of the reasons why we have argued that there needs to be
a nuclear component and that we need to develop CCS is that it is a
domestic supply, and that is very important to
us.
Q
36Mr.
Swire: I am aware of that. That was not really my
question. I prefaced my question by saying exactly
that. My question was about security surrounding the decommissioning of
nuclear installations, the commissioning of new installations and
offshore wind farms, oil and gas within our own area, not about
bringing in supplies from
overseas. Paul
Noon: I am afraid I cannot answer at all about
offshore facilities. In terms of the nuclear industry and nuclear
decommissioning, I can say, from the direct observation of many members
who work in that area, that there is a very, very strong emphasis on
all aspects of security. We do not have concerns in that
respect. Roger
Salomone: We would agree that there is a relatively
robust regime in place at the moment for nuclear installations, and I
think the decommissioning plans between nuclear operators and
Government, which will be a feature of the new Bill, could go some way
towards strengthening that by adding more
detail.
Q
37Mr.
Reed: The decommissioning costs of nuclear as an
electricity generating source are fairly well understood by the
industry and by people all over the world. I think that is beyond any
meaningful doubt. Do you believe that the Bill does enough to make
provision for those other electricity and energy generating
sources—such as the oil, gas and coal industries—to cater
to their own decommissioning costs and the management of their
intergenerational waste, including, in the case of those three energy
producing sectors, radioactive
waste? Paul
Noon: That is not an area we have done any work on.
If I were to say otherwise I would be misleading
you.
Q
38Anne
Main (St. Albans) (Con): Can I just take Mr.
Pearson back to the elephant in the room, which he described to us?
Fuel poverty and smart metering, which were in the energy White Paper,
are noticeably absent in the Bill. Given that there is a degree of
sclerosis, with industry wondering whether it can have a nationwide
roll-out, do you have concerns that there is not enough direction, and,
indeed, that interoperability might be compromised if people just roll
this out in small areas without a comprehensive process being put in
place? Philip
Pearson: Are you referring to smart
metering?
Philip
Pearson: Our colleagues from the EEF have already
indicated the industrial opportunities that would come through an
ambitious smart metering programme. Where would the meters be made?
Could we ensure that they were procured in the UK? There are pilot
studies going on. Frankly, we believe that we need to move rapidly from
pilot to full-scale implementation. It would be a very popular measure,
it would be a way of saving money, and a way of promoting UK industry.
We believe that the Bill should contain enabling powers, and that that
should be followed by consultation and rapid deployment. You may hear
evidence from other organisations, such as Energywatch, in support of
this—which seems to us to be a very rational way
forward—and of getting it done
quickly.
Q
39Anne
Main: Do you believe that, while it may help people manage
the amount of fuel they use, it may also, particularly with pre-payment
meters, help to alleviate fuel poverty by possibly switching people to
smarter
tariffs? Philip
Pearson: I totally agree. This would be a key
opportunity, a win-win situation. To have smart metering and social
tariffs applied together would, I think, be something that the
Government could rightly be proud of as a significant way of addressing
the problem of fuel
poverty.
Q
40Charles
Hendry: I have a brief question specifically on gas
storage. You will be aware, and those of you from the EEF particularly
will be aware from your members’ perspective that two years ago
we nearly ran out of gas, and that a huge price hike did tremendous
damage to much of British business. Since then, the situation has
changed significantly. A pipeline has opened up, and we have new liquid
natural gas facilities, but there is still a need for improved gas
storage facilities. Is it your perception that the measures in the Bill
will do enough to provide sufficient new gas storage, or does more need
to be
done? Roger
Salomone: I think that the measures in
the Bill are welcome to provide a clearer framework for
investing in and deploying offshore gas storage. The Planning Bill is
probably equally important, and that is the Bill that we are looking at
to deliver
that.
Q
41Dr.
Iddon: How will the transfer of responsibility for
electricity safety to the Health and Safety Executive change the way in
which it is enforced in view of the fact that HSE is complaining about
a shortage of funds and staff? Is that a good
idea?
Q
42Paul Noon: We support it as
an idea, but it must come with sufficient resources to be effective.
That is the only question in our mind. We believe that the Health and
Safety Executive is well placed to do that but, like everything else
that the Health and Safety Executive does, it needs priority to do it
effectively.
Q
43Dr.
Iddon: So you have no objections to the
transfer.
The
Chairman: If Members have no further questions, I thank
our first set of witnesses for appearing in front of us, and call the
next set of
witnesses. We
will now hear oral evidence from npower, E.ON, EDF Energy, Centrica,
Scottish Power, and Scottish and Southern Energy. I welcome the
witnesses, and perhaps you would like to start by introducing
yourselves, starting with Dr.
MacLean. Dr.
MacLean: I am Keith
MacLean from Scottish and Southern
Energy. Sara
Vaughan: I am Sara Vaughan from E.ON
UK. Guy
Johnson: I am Guy Johnson from
npower. Denis
Linford: I am Denis Linford from EDF
Energy. Barry
Neville: I am Barry Neville from
Centrica. Rupert
Steele: I am Rupert Steele from
Scottish Power.
The
Chairman: Thank you all. Before calling the first Member
to ask a question, I remind all Members that questions should be
limited to matters within the scope of the Bill, and that, in view of
the time constraints, both questions and answers should be
brief.
Q
44Steve
Webb (Northavon) (LD): You will know that last year the
Government talked about legislating for social tariffs, and that not
legislating was conditional on action by you on social tariffs. We have
all received letters from you telling us the wonderful things you were
doing about social tariffs, and I hope that in your response you will
not simply list them, because we are familiar with them. Can I put a
proposition to you that essentially it is not your job to do the
Government’s work for them, that you are in business principally
to make money, and that although you spend a few million here or there
on social tariffs, it is entirely peripheral to what you do and in the
scale of your operations is miniscule? Therefore, if the Government
want to achieve the social objective of social tariffs, they should do
so by legislation. Having little chats with you and threatening you has
failed to deliver, especially even with what is happening with fuel
poverty. Is that a fair
characterisation? Dr.
MacLean: I do not think
that that is a fair characterisation. In part you are correct in that
the problem is a complicated one, that poverty is one of the key
factors and that it is not something that we can deal with. But the
fuel part of the problem is something that we can do a lot about, and
we spend not millions but billions on energy efficiency measures, both
measures included in Government schemes and voluntary ones. We believe
that that is the right approach, because the measures actually cure the
problem rather than treating the symptoms. They provide a permanent
opportunity to create warm, dry homes that require very little fuel and
therefore become almost independent of its price. We believe that that
is a big role that our company can play. However, we have to recognise
that there are severe limitations when it comes to the income side of
things. Finally, the
work that we can do would be an awful lot easier if we could find a
better way of targeting those who really are needy, either working
together with Government or looking at some form of agency that will
deal with that issue so that the help goes where it is needed: that we
find those properties that we can treat and those people who are most
in need of benefits, which they are often not even
claiming. Sara
Vaughan: That is right. We view fuel poverty as a
complex issue; it does not have a single solution. Something like a
social tariff might seem like an easy answer but it is not as easy as
it seems. If, for example, you set a tariff at a particular level, who
then is going to deal with it when the prices go up? Who is going to
deal with the hedging of that tariff? How is the pricing of it going to
work? Are you, by virtue of putting in place a social tariff, going to
undermine the customer’s engagement with the market, with the
sorts of sustainable solutions that Keith referred to in terms of
energy efficiency, insulating their homes and moving forward in a more
sustainable way to engage with the market? Are you even going to take
away those customers’ chances to engage with the competitive
market by virtue of just putting in place a social tariff? The
targeting point is an important one as well; it is difficult to
target.
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