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We have great potential in this country. The coal industry remains massively untapped-we have tapped into only 10 per cent. of the coal supply in this country. In addition to the nuclear power potential, we know about the potential of offshore wind and tidal power. Those sources all provide excellent opportunities, but
we must ensure that we have a package of incentives and developments that make them work. We have a massively bureaucratic system at the moment. It is in place to try to drive the market, work with it and make it operate, but the system is confusing, costly and comfortable for business.
The Select Committee is to publish a report-I believe that this will happen this week-on the need to develop new networks for the grids. Some 17 acronyms in that report relate to trying to dictate the market, including: BETTA, which stands for the British electricity trading and transmission arrangements; LENS, which stands for the long-term electricity network scenarios; and ENSG, which stands for the electricity networks strategy group. All those things have been put in place to try to make the market work in the way that it should be working in any case.
This is a huge challenge for the future, and hon. Members will not be surprised to learn that I do not believe that the market will provide in the way that this country really needs and that I am convinced that the Conservative party will not be able to work with the market in the way that is right for this country. We need to get this Bill through and we need this Government returned to make sure that we put this right.
Joan Ruddock: I thank my hon. Friend the Member for Blaydon (Mr. Anderson) for a superb Third Reading speech; I am glad to have heard it at this point because it much encouraged me.
I shall try to respond to the points that must not remain on the record without a response being given and on which I have been asked questions.
I asked the hon. Member for Wealden (Charles Hendry) to provide the details of the companies that supported his view that an EPS set at the right level would encourage investment. I must tell him that the Scottish and Southern Energy Group has said that
"even legislation which provides for an EPS to be introduced at a level to be decided later, could deter investment, because it increases political risk".
"the threat of any introduction of an EPS would act as a strong deterrent for investment in new plant".
I believe that he is unable to support his arguments and, thus, his case for an EPS.
Charles Hendry: Will the Minister confirm that she was saying just a little while ago that the Government themselves would look at an EPS if that was necessary in a few years' time? Therefore, the EPS is on the agenda, so it is just a question of whether the EPS is set in the next few months to give clarity ahead of investment decisions or whether it hangs over companies like the sword of Damocles and possibly undermines those investment decisions.
Joan Ruddock: The quotes that we have seen and the conversations that we have had with the companies have all been based around the provisions of this Bill, what they mean for investment in this country now and how those investment decisions would be undermined by the introduction of an EPS now, as proposed in the new clause that the hon. Gentleman supports.
The hon. Member for Cheltenham (Martin Horwood) said that there was a need for clear signals to be given. I do not believe that there could be a clearer signal than the framework that we offer in this Bill, the levy that it contains and the certainty that companies can have that they can invest at a time when they are being asked to do so in technology that in its complete form-from capture to transportation to storage-has not yet been proven. He cited a range of projects that appear in an IEA report. I have to tell him that I have now had the opportunity to check all those projects and I have found that some of them are not operational, some will not necessarily be taken forward and none is on a commercial scale. I hope that he will therefore understand that what is proposed by our framework is necessary, because those projects are not on a commercial scale, and the support that we rightly offer through this Bill is what industry needs.
The hon. Gentleman asked about EU law and suggested that there was an amendment to a directive that could be a threat to any future EPS. We have been in discussions on the matter and we remain convinced that the proposed amendment does not threaten any attempt by a sovereign state to introduce an EPS at any stage in the future.
I am glad to see my hon. Friend the Member for Nottingham, South (Alan Simpson) in his place. I think that he compared me to a worm today, which I am very surprised at-he compared me to an invertebrate, and the best known invertebrate is a worm. He spoke at some length about how he thinks that an EPS can incentivise, and made comparisons with the German feed-in tariffs and catalytic converters in cars. My hon. Friend the Member for Morley and Rothwell (Colin Challen) intervened and made the following point, but it needs to be emphasised. There is a fundamental difference between creating incentives to bring on and to produce more use of existing technologies, and creating the incentives required to enable people to take on a huge risk where the technology is not yet entirely proven. We reject absolutely the comparisons made by my hon. Friend the Member for Nottingham, South, which do not support a case for imposing an EPS such as that which he suggests at this stage.
When EU law sets standards, it does so on the basis of the best available technology-that means not just the technology that is available for lab-scale prototypes but that which is economically and technically feasible. That is the judgment that we must make when we are considering the investment programme that we propose and how an EPS would undermine it.
My hon. Friend the Member for Nottingham, South also asked, as did my right hon. Friend the Member for Edinburgh, East (Dr. Strang), why the Government would throw such enormous sums of money at the private sector without setting any conditions. First, let me remind the House that conditions already exist in our climate change levy and the EU emissions trading scheme. We are already in a carbon-constrained economy where all fossil fuels are subject to some constraint, and that is recognised and codified in the carbon budgets that we have set through to 2022. They, of course, are statutory.
Obviously, conditions will be set on the projects through the incentive. There will be performance standards, which will need to include the meeting of an agreed schedule for the storage of CO2 and the amount of CO2
that is to be stored. There will need to be monitoring of the CCS projects, as well as the collection, collation and reporting of information to an agreed standard. The information will then have to be shared. We will have to ensure that the CCS projects fully meet any relevant safety and other standards. So, there will be standards. In addition, the payment made to companies will not just be given to companies willy-nilly. It will be awarded to companies based on the amount of CO2 that is saved.
As for the right hon. Member for Wokingham (Mr. Redwood), whom I see nodding-perhaps he is glad to have had that information-he asked for more information. He asked about the overall investment and I repeat what I said earlier: the estimated cost of the investment is £9.5 billion. He spoke well and in a way with which we would all agree about energy security. It is fundamental to what we are doing and the Bill is intended to assist with energy security. He said that the Government need to be clear about the missing bits, and we think that we have done that by saying that we need new nuclear projects, by making massive renewables incentives available to industry and by saying categorically and specifically in the Bill that we need four new coal-fired power stations, which we will enable to come on stream by making the CCS levy available. He can find further details about finance in the annexe to the low carbon transition plan, but that will be revised soon, so he is welcome to write to me if he wants further detail, which I may or may not be able to give him. Where I am able to, I will do so.
5.30 pm
I very much appreciated the speech of the hon. Member for Northampton, South (Mr. Binley), and I think that we all appreciated his enthusiasm for carbon capture and storage. He was at the meeting of the all-party group on coalfield communities that I addressed yesterday. It is important that people across the House have a commitment to coal and to the future in the way that he expressed. I cannot give him the satisfaction of agreeing to move from a three-year reporting period to a one-year reporting period, but I will say that, as he well knows, it is up to all Members of the House at Question Time, in Opposition day debates and on other occasions to obtain more frequent responses from Ministers if that seems appropriate. He asked specifically about the nature of reports. I can give him the assurance that all matters such as clusters, the concept of pipeline networks and storage capacity-indeed, all the potential uses that he could think of-can be covered by reports, and we anticipate that they will be.
The hon. Member for Angus (Mr. Weir) asked about a subsection of new clause 8 and the fact that we have said clearly that we will be in a position, through the reporting regime, to consider whether we need to revise policies. He has interpreted that to mean that we will revise matters in 2020. On the contrary, we have three-year stages, so there will always be the potential to revise policy as we go along. The difference between our position and that of putting an EPS in place very quickly is that we will have knowledge of how CCS is going and will therefore be able to make better judgments not only about whether an EPS might be
required at any stage, but on whether any other measures are required. Companies clearly understand that we are putting our confidence in CCS and we are making it possible, but sensibly and rationally. We will revise matters on the basis of how well things are going and what is achieved.
My hon. Friend the Member for Blaydon rightly said that I did not respond immediately to his question about the likely effect on customers' bills. I responded to that point later, but he might not have heard that response. We think that the levy that we propose would have an effect in the region of 2 to 3 per cent. on a customer's annual bill.
Finally, I thank my hon. Friends the Members for Morley and Rothwell, for Sherwood (Paddy Tipping) and for Southampton, Test (Dr. Whitehead), all of whom I believe are environmental vertebrates, certainly in my experience, in their enthusiasm- [ Interruption. ] There has been an in-joke all afternoon about the vertebrates and the invertebrates. My hon. Friends have demolished the arguments in favour of introducing an EPS under any of the new clauses, and have demonstrated the perverse outcomes that could result if we were to vote in favour of any of them. I commend new clause 8 to the House.
New clause 8 accordingly read a Second time, and added to the Bill.
Simon Hughes: On a point of order, Madam Deputy Speaker. We understand, of course, the sequence of votes and debates but, for the purposes of clarification, would you be kind enough to confirm that you will permit a vote on new clause 15? It was in the group of amendments that we have just debated. Will we have a vote on it at the end of the time allocated for the Report stage?
Madam Deputy Speaker (Sylvia Heal): I was told by the previous occupant of the Chair that there would be a request for that vote, and I am happy to accede to it.
'(1) The Secretary of State may modify-
(a) a condition of a particular licence under section 7A(1) of the Gas Act 1986 (supply licences);
(b) the standard conditions incorporated in licences under that provision by virtue of section 8 of that Act;
(c) a condition of a particular licence under section 6(1)(d) of the Electricity Act 1989 (supply licences);
(d) the standard conditions incorporated in licences under that provision by virtue of section 8A of that Act.
(2) The Secretary of State may make a modification under subsection (1) only for the purpose of securing that customers under contracts for domestic supply are notified about changes which licence holders make under unilateral variation terms in-
(a) any terms of such contracts, or
(b) the price charged for energy supplied under such contracts,
within a period specified in (or determined by reference to criteria set by) the licence as so modified.
(3) Modifications under subsection (1) may include provision-
(a) requiring a notice to be given before or after the change to which it relates is made,
(b) about the form of a notice and the manner in which it is to be given,
(c) about the effect of a notice,
(d) about the effect of failure to give a notice, or
(e) requiring a notice to be accompanied by other information.
(4) The power conferred by subsection (1) may not be exercised after the end of the period of 3 years beginning with the day on which that subsection comes into force.
(5) Before making a modification under subsection (1), the Secretary of State must consult-
(a) the holder of any licence being modified,
(c) such other persons as the Secretary of State thinks it is appropriate to consult.
(6) In this section a "unilateral variation term" means a term in a contract for domestic supply under which a licence holder is permitted to change a term of the contract or a price charged for energy supplied under it, without the agreement of the customer to the particular changes.
(7) For the purposes of subsection (2), agreement by a customer under a contract for domestic supply to a unilateral variation term (whether by entering into the contract or otherwise) is not be taken to constitute agreement to any particular changes made by virtue of the term.
"a contract for domestic supply" means a contract for the supply of energy by a licence holder to a customer at domestic premises wholly or mainly for domestic purposes;
(c) in relation to the holder of a licence under section 7A(1) of the Gas Act 1986, means gas;(d) in relation to the holder of a licence under section 6(1)(d) of the Electricity Act 1989, means electricity.'.- (Joan Ruddock.)Brought up, and read the First time.
Joan Ruddock: I beg to move, That the clause be read a Second time.
Madam Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 10- General duties of the Authority and the Secretary of State.
Government new clause 11- Modifications of licences etc: Parliamentary procedure.
Government new clause 12- Licence modifications etc.
Government new clause 13- Consequential amendments.
New clause 2- Minimum time period for notification of price changes-
'The Secretary of State shall by regulations set down the period of notice which suppliers must give to their customers of changes in their tariffs before a change in tariffs can be made.'.
New clause 18- Alterations to the threshold for upholding objections to modifications of the standard conditions of electricity licences-
'(1) The Electricity Act 1989 is amended as follows.
(2) Omit section 11A(6)(b) and insert-
"(b) if one or more relevant licence holders give notice of objection to the Authority within that time-
(i) the proportion (expressed as a percentage) of the relevant licence holders, calculated in accordance with subsection (7A), who have given notice of objection is less than the percentage set out in subsection (7B); and
(ii) the percentage given by subsection (7) is less than the percentage set out in subsection (7B); or".
(3) After section 11A(7) insert-
"(7A) Where more than one relevant licence holder is in common ownership, these shall be collectively considered to be a single relevant licence holder for the purpose of calculating the percentage.
(7B) The percentage shall be the higher of 50% or such other figure as may be prescribed by the Secretary of State.".'.
New clause 21- Alterations to the threshold for upholding objections to modifications of the standard conditions of gas licences-
'(1) The Gas Act 1986 is amended as follows.
(2) Omit section 23(7)(b) and insert-
"(b) if one or more relevant licence holders give notice of objection to the Authority within that time-
(i) the proportion (expressed as a percentage) of the relevant licence holders, calculated in accordance with subsection (8A), who have given notice of objection is less than the percentage set out in subsection (8B); and
(ii) the percentage given by subsection (8) is less than such percentage set out in subsection (8B); or".
(3) After section 23(8) insert-
"(8A) Where more than one relevant licence holder is in common ownership, these shall be collectively considered to be a single relevant licence holder for the purpose of calculating the percentage.
(8B) The percentage shall be the higher of 50% or such other figure as may be prescribed by the Secretary of State.".'.
New clause 22- Information on the profits of energy companies on energy bills-
'The Secretary of State may modify-
(a) a condition of the license of section 11A of the Electricity Act 1989 (transmission of licenses and supply licenses) to make provision on energy bills for information about the profits of electricity suppliers;
(b) a condition of the license of section 23 (1) (b) of the Gas Act 1986 (transmission licences and supply licenses) to make provision on energy bills for information about the profits of gas suppliers; and
(c) the standard conditions incorporated in the licenses under those provisions by virtue of those acts.'.
Amendment 2, in clause 18, page 15, line 32, at end insert-
'(2A) The Secretary of State may not exercise the power in subsection (1) unless he or she is of the opinion that the modifications would not have adverse impacts on security of supply or investment in electricity generation capacity.'.
Government amendments 15 to 18.
Government amendments 20 to 35.
Government new schedule 1 -'Consequential Amendments.
Joan Ruddock: With the exception of Government amendments 27 and 28, these amendments relate to the notification period within which energy companies must inform their customers of tariff changes. New clause 2, tabled by the hon. Member for North Southwark and Bermondsey (Simon Hughes), also relates to that matter.
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