2 Energy Bill
111. The Energy Bill was introduced in the House
of Commons on 29 November 2012 and received its Third Reading
on 4 June 2013. The Secretary of State for Energy and Climate
Change has certified that, in his view, the Bill is compatible
with Convention rights.
112. The Explanatory Notes to the Bill introduced
in the House of Commons provided little detail of the Government's
analysis of the human rights compatibility of the Bill.[59]
We asked the Department to provide us with a human rights memorandum,
which we received on 18 February 2013.[60]
We also received a supplementary human rights memorandum from
the Department on 12 March 2013, which addressed the new clauses
added to the Bill in the Public Bill Committee of the House of
Commons.[61] These documents
are published on the Department's website.[62]
We are grateful to the Department for producing a detailed
and helpful human rights memorandum. We reiterate our view that
it is best practice to publish a detailed memorandum on introduction
of a Bill, which is based on the ECHR memorandum prepared for
Parliamentary Business and Legislation Committee. We welcome the
Department's proactive approach in providing us with a supplementary
human rights memorandum to accompany amendments to the Bill at
Commons Committee Stage. We are also grateful for the additional
information provided to us by the Department in correspondence,
which assisted us further in our scrutiny of the Bill.
113. The Government's detailed human rights memoranda
allowed us to focus on two specific questions in our scrutiny
of the Bill concerning powers to obtain and share information,
and access to an appeal hearing in relation to capacity incentive
payments. We wrote to the Secretary of State on 26 March 2013
requesting further information in relation to these issues.[63]
We received a detailed response on 17 April 2013.[64]
Proposed use of secondary legislation
in relation to information powers
114. The Bill contains broad powers to make secondary
legislation allowing the Secretary of State to obtain and share
information.[65] The
Government's human rights memorandum said that safeguards in relation
to the use of these powers would also be set out in secondary
legislation.[66]
115. These powers engage the right to respect for
the home and correspondence, guaranteed under Article 8 of the
European Convention on Human Rights. The Government states that
the aim of the information provisions is to ensure the effective
implementation and operation of the schemes set up under the Bill,
which are designed to protect the security and efficiency of the
national energy supply. The Government states that this is in
the "economic wellbeing of the country", which is a
legitimate aim under Article 8(2) of the Convention.[67]
116. Our concern about these provisions related to
the Government's position that suitable controls would be placed
upon the use of information in secondary legislation.[68]
It was therefore not possible to assess whether the powers provided
for in the Bill would be proportionate and exercised in such a
way which is compatible with Article 8 of the Convention. The
Committee wrote to the Government to ask for further information
in relation to these powers.
117. The Government's response provided a detailed
analysis of each instance in the Bill where there is a power to
make secondary legislation allowing the acquisition and dissemination
of information (which the human rights memorandum did not do).
In each instance, the Government sets out the purpose for which
information may be required under the powers. The purposes are:
- Encouraging low carbon electricity
generation;
- Providing capacity to meet the demands of consumers
for the supply of electricity in the UK;
- Facilitating participation in or promoting liquidity
in the electricity market;
- As part of a relevant licence condition (i.e.
imposing obligations relating to the disclosure and publication
of information as part of a licence condition); and
- In relation to a number of energy investment
schemes created by the Bill, such as the Investment Contracts
scheme and the Certificate Purchase scheme.
118. The Government's response also sets out the
parties that are likely to be required to provide information,
which are relevant public authorities, a person who holds a relevant
licence in relation to energy generation or supply, or who voluntarily
enters into a relevant contract under the Bill's energy schemes
(e.g. the Contracts for Difference scheme or Investment scheme).
The Government further states that it is "unlikely"
that information relating to individuals could be acquired and
transferred using the regulations made under the Bill's information
powers.[69] However,
if this is the Government's intention, we consider that this could
be made clear on the face of the Bill by expressly excluding information
relating to individuals from the scope of the power to obtain
and disclose information. We recommend that the Government
provides clarification as to whether or not any of the powers
contained in this Bill, or any other relevant powers, could be
used to obtain information relating to individual consumers.
119. There are two instances where there is specific
provision allowing regulations to make provision for the protection
of confidential or sensitive information.[70]
However, in relation to other information powers, the Government's
response states "we would expect to incorporate safeguards
in secondary legislation for the protection of confidential information".[71]
However, we consider that this could be dealt on the face of
the Bill in the same way as clauses 13(2)(f) and 27(2)(e).
120. We note the Government's commitment to providing
safeguards in secondary legislation to regulate the acquisition
and handling of information. However, we consider that where
there is a need to legislate to require and share information,
the Government's intentions should be set out clearly in primary
legislation. We therefore recommend that the Government reconsiders
whether more detailed safeguards could be included within the
scope of the powers to obtain and disclose information on the
face of the Bill.
Capacity incentives and the right
of appeal
121. The Bill contains provisions which enable the
Secretary of State to establish through secondary legislation
a scheme called the "capacity market", which is designed
to ensure that energy supply meets demand. The capacity market
will be administered by a "systems operator", designated
by the Secretary of State. The systems operator will have the
power to impose financial penalties called "capacity incentives"
on energy providers that fail to deliver electricity in the circumstances
defined in secondary legislation.[72]
122. The power to levy financial penalties should
be accompanied by safeguards such as the provision of a right
of appeal, but the Bill does not contain a provision to enable
an energy provider to appeal the imposition of the capacity incentive,
particularly on grounds of liability or the amount to be paid.
In its human rights memorandum, the Government set out its view
that judicial review is a "sufficient appeal mechanism against
any decision by the system operator as to whether a particular
capacity provider [...] must pay a capacity incentive in a particular
situation".[73]
However, judicial review is a supervisory function and does not
provide a full right of appeal on the merits of the decision.
The Committee therefore wrote to the Government to request further
information about the capacity incentives.
123. In its response, the Government sets out further
details about this scheme and reiterates its view that Article
6(1) of the European Convention is not engaged in this instance.
However, the Government goes on to set out its intention to make
provision in secondary legislation for appeals against the decisions
to impose capacity incentives.[74]
The Government states that these details have not yet been finalised,[75]
but such appeals might be to the Gas and Electricity Markets Authority
or to another independent party.[76]
124. We welcome the Government's intention to
provide for a right of appeal against a decision to impose a capacity
incentive payment. However, we consider that where provisions
for appeal are necessary to satisfy the right of access to an
independent and impartial tribunal guaranteed by Article 6(1)
ECHR, these safeguards should be expressly provided for on the
face of the Bill.
59 Bill 126 EN, paras 202-205 Back
60
Memorandum on European Convention on Human Rights Compatibility
for the Energy Bill 2012 Back
61
Memorandum on European Convention on Human Rights Compatibility
for the Energy Bill 2012 (Supplement on new clauses added in Commons
Committee) Back
62
Error! Bookmark not defined. Back
63
Letter from the Chair, to Rt Hon Edward Davey MP, Secretary of
State for Energy and Climate Change, 26 March 2013 Back
64
Letter from Rt Hon Edward Davey MP, Secretary of State for Energy
and Climate Change, to the Chair, 17 April 2013 Back
65
Clauses 13(2), 27, 38(3)(c), 41 and paragraph 10 of Schedule
2 Back
66
Memorandum on European Convention on Human Rights Compatibility
for the Energy Bill, paras 35 and 68 Back
67
Letter from Rt Hon Edward Davey MP, Secretary of State for Energy
and Climate Change, to the Chair, 17 April 2013, p. 2; Memorandum
on European Convention on Human Rights Compatibility for the Energy
Bill, paras Back
68
Memorandum on European Convention on Human Rights Compatibility
for the Energy Bill, paras 35 and 68 Back
69
Letter from Rt Hon Edward Davey MP, Secretary of State for Energy
and Climate Change, to the Chair, 17 April 2013, p. 2 & 3 Back
70
Clauses 13(2)(f) and 27(2)(e) Back
71
Letter from Rt Hon Edward Davey MP, Secretary of State for Energy
and Climate Change, to the Chair, 17 April 2013, p. 2 Back
72
Clauses 17 to 25 of the Bill, ENs para 82 Back
73
Memorandum on European Convention on Human Rights Compatibility
for the Energy Bill, para 61 Back
74
Letter from Rt Hon Edward Davey MP, Secretary of State for Energy
and Climate Change, to the Chair, 17 April 2013, p.5 Back
75
During the Public Bill Committee, the Minister of State for Energy
and Climate Change stated that a public consultation on the capacity
market regulations and industry code is due to take place in autumn
2013. PBC HC Deb, 29 January 2013, c356 Back
76
Letter from Rt Hon Edward Davey MP, Secretary of State for Energy
and Climate Change, to the Chair, 17 April 2013, p.6 Back
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