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Lord Kingsland: My Lords, I am most grateful to the Minister for giving way. As a substitute for the word "reasonable", will the Minister consider the word "proportional"--a proportional penalty?

Lord McIntosh of Haringey: My Lords, I resisted that in the Financial Services Bill and I shall resist it here. The word "reasonable" is well understood in law. I am not at all sure that "proportional" is understood in law. Proportional to what?

Lord Kingsland: My Lords, I am most grateful to the Minister for giving way again. The notion of proportionality derives from the European Convention on Human Rights. The noble and learned Lord the Lord Chancellor was rich in the language of proportionality during the passage of the Human Rights Bill through your Lordships' House; and I believe that, at least, certain sections of the Government are most familiar with this concept which will become enshrined in our law from 2nd October.

Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Kingsland, has a greater knowledge of government legislation than I. I look forward to debating the point when he puts down an appropriate amendment. My understanding is that "reasonable" works pretty well. Despite what he and the noble Lords, Lord Borrie and Lord Currie, have said, the Competition Act is under a different regime with limits which can be traced back to European competition law limits, and there is no reason why the Utilities Bill should follow that precedent.

I was asked about the safeguards which exist for companies in terms of financial penalties. There are many safeguards for companies, and that is relevant to the ECHR point. First, it must be reasonable in all the circumstances of the case. Secondly, the authority will have to produce and consult on a statement of policy on the imposition of penalties. Thirdly, the authority must serve notice of its intention to impose a penalty, setting out which obligation has been breached; which action or omission constituted the breach; and the proposed level of the penalty. Fourthly, the authority must bring to the attention of interested parties and take account of representations received. The authority may then vary the proposed level of the penalty. The company may challenge the imposition or amount of the penalty or payment schedule in the courts. So companies which honour their obligations in all of those respects have nothing to fear.

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My noble friends Lord Borrie and Lord Currie both suggested that the proposed time limit of 12 months is too short. I shall think about that point. It is important that these provisions, which plug a significant gap in the regulatory authority's powers, should be fully effective, but I shall think about that between now and the Committee stage.

The noble Lord, Lord Kingsland, asked me when the statement of policy would be produced. That is a matter for the authority and not for the Government. However, I shall find out what further information I can on the point and write to him about it.

The noble Lord, Lord Kingsland, asked me also about the relationship between the Competition Act and the Utilities Bill. The Competition Act strengthened the sectoral regulators' power to investigate and remedy anti-competitive behaviour in the utility sectors by providing for them to exercise powers concurrently with the DGFT. That is joined-up government. That was anticipated in the Competition Act.

The thrust of the proposals in the Utilities Bill is to improve sectoral regulation, making it more accountable, transparent and predictable and to ensure that consumers receive a fair deal. There is no contradiction between those aims.

The noble Lord also asked me about the relationship with the Freedom of Information Bill. This Bill's information provisions are concerned with proactive publication by the regulator and the consumer council. There is a clear distinction between that and freedom of information which is a right to information when it is requested of public authorities by persons. Of course, the freedom of information regime will apply in due course both to the regulator and to the consumer council.

I have a more complicated answer on multiple jeopardy. Since I am half way through the maximum time which I wanted to allow myself and nothing like half way through my response, and since nobody else raised the issue, perhaps the noble Lord, Lord Kingsland, will allow me to write to him about that. The same is true of the imposition and amount of financial penalty.

Therefore, perhaps the House will allow me to move on to the issue of environmental friendliness, which has been a major topic of debate this afternoon. The starting point must be that we have environmental commitments, but they go wider than this legislation. The climate change programme, for example, which we published on 9th March involves matters concerned with this legislation but not only matters which are concerned with it. My noble friend Lord Judd and others asked that environmental and energy efficiency objectives for the authority should be put in parallel with those in relation to the consumer. I say to them that that would not be appropriate. The primary purpose must be to serve the interests of consumers. In itself, that involves an element of environmental protection and energy efficiency. But it is not the only way in which environmental protection and energy efficiency will be achieved.

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But the Bill makes a major contribution in that sphere. It includes a duty on Ministers to give guidance to regulators on social and environmental aspects of government policy. It involves new renewables obligations and new energy efficiency obligations. Our renewables obligation is, and has been clearly stated as being, in relation to carbon emissions, saving 2.5 million tonnes by 2010 from achieving 10 per cent generation from renewables. The noble Lord, Lord Ezra, thinks that that should be written on to the face of the Bill, but it is a firm commitment by the Government which affects much legislation and it would not be appropriate to put it on the face of one Bill.

The Bill provides a level regulatory playing field for embedded generation, including combined heat and power and small-scale solar generation.

Perhaps I may start at the beginning of the questioning about renewable technology. The noble Baroness, Lady Buscombe, suggested that our funding on research was inadequate and represented only £10 million. In fact, it was £10.5 million in the last financial year; it is £14 million this year; and will be £18 million next year. I believe that that is a suitable answer to the noble Baroness, Lady Byford, who asked for pump-priming finance.

The noble Baroness, Lady Byford, asked me also about whether the Government can increase the renewables obligation. The answer to that is yes. She asked me when the Government will publish their long-term plan for renewables. We have already declared our target. We shall consult further on the target as we get into the period of the build-up towards achievement of that target. We shall establish a clear, long-term framework.

I was asked by the noble Lord, Lord Ezra, about the impact of the new electricity trading arrangements on combined heat and power and renewables. The problem is that those are not homogenous. The impact of NETA on them will vary, as indeed, the environmental proposal document, which was published last October, made clear. Most combined heat and power sites are net importers of electricity, as my noble friend Lord Currie said, and will benefit from cheaper wholesale electricity prices. Renewable plants which have unpredictable output--for example, wind generators--may incur imbalance charges but not all renewables generators have unpredictable input.

The noble Baroness, Lady Byford, is enthusiastic about energy from waste. Many in the environmental lobby are not at all enthusiastic about energy from waste and there is great controversy on that subject among those who are concerned with those matters.

I was asked by the noble Lord, Lord Ezra, about net metering. The Bill is neutral on that. There can be agreements. There have been some agreements about net metering; in other words, those who are generating electricity from generated plant selling back to the generator at the same price as they could buy in. The answer can only be that sometimes it is appropriate and sometimes it is not. The problem with the surplus

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from embedded generation is that it is unpredictable and, particularly from solar power, is likely to come at a time when demand generally is much lower unless we make better use of air conditioning than we do at the moment.

Lord Ezra: My Lords, does the noble Lord, however, agree in the case of net metering that if there is to be a successful development of mini CHP in domestic premises, something like net metering would be indispensable?

Lord McIntosh of Haringey: My Lords, that may have to be done by contract rather than by law, by encouraging net metering. We are certainly not discouraging net metering by anything which is being done.

The noble Lord, Lord Jenkin, asked me some very interesting questions about biomass and renewables and again, those are quite technical and were specific to him. Perhaps he will forgive me if I write to him about them.

In general, the suppliers will need to draw on new technology such as offshore wind and energy crops and non-food crops in order to meet their obligation in the longer term.

The point about the traded obligation is very clear. If you do not have a traded obligation, some suppliers will achieve their objective and then rest on their laurels and not go any further when they could go further; and some will not be able to achieve their objective. If you have traded obligations, you have a financial incentive for those who could go further than their minimum objective to do better.

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