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Lord Fraser of Carmyllie: My Lords, before the Minister sits down, I hope I may add that I am not surprised that he says he has greater confidence in making that assertion now. What I am trying to ascertain is whether he has complete confidence in making it.

Lord McIntosh of Haringey: My Lords, I make these statements, as always, on legal advice and that advice has not changed.

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The noble and learned Lord makes a legitimate point which deserves a response; namely, that certain standard conditions can be modified without consent. Under certain circumstances a breach of conditions could invoke penalties. I do not call them offences as I do not want to reopen the debate that we had on the then Financial Services and Markets Bill. However, they are penalties.

If the noble and learned Lord is present when we debate Amendment No. 38 and the amendment with which it is grouped, he will hear what we think of unlimited penalties. I shall not weary the House by replying at length to the issue that he raised. However, I shall write to the noble and learned Lord before Third Reading and copy the letter to all other noble Lords who have taken part in the debate.

We go to extraordinary lengths to set out in the legislation procedures under which licence conditions may be modified without consent. I shall set all that out in the letter and reaffirm my confidence that I have done the right thing in making the declaration that I have.

On Question, amendment agreed to.

Clause 43 [Altering activities requiring electricity licence]:

Lord McIntosh of Haringey moved Amendment No. 23:

    Page 46, line 46, at end insert ("; and

( ) any advice given by the Health and Safety Commission or the Secretary of State under section 3C (advice about health and safety in relation to electricity)").

On Question, amendment agreed to.

Clause 46 [Power to recover expenditure]:

Lord McIntosh of Haringey moved Amendment No. 24:

    Page 51, leave out lines 42 to 45 and insert--

("(b) a person ("the initial contributor") has made a payment to the distributor in respect of those expenses, the line or plant having been provided for the purpose of making a connection to any premises or distribution system as required by that person."").

The noble Lord said: My Lords, in moving Amendment No. 24 I wish to speak also to Amendment No. 25. Both amendments relate to the matter of electricity connections. Amendment No. 24 is perhaps rather obscure at first sight. Indeed, it amends a rather obscure part of the Bill and of the Electricity Act.

When someone requires a connection, they are required to pay for it. But the position need not always be as straightforward as it might appear. I seek to illustrate that point. Suppose that a cottage is built a mile from the nearest electricity distribution line. The owner of the cottage (or, under the Act as it will be amended by this Bill, a supplier acting with that person's consent) would have to pay for a wire to be brought from the nearest distribution line to the meter point in the cottage. Other equipment, such as transformers, might be needed. That is likely to be a significant expense.

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Suppose that a couple of years later someone else builds a cottage a hundred yards from the first one and requires an electricity connection. The distribution company will almost certainly make a connection to the second cottage using the wire that was laid to the first cottage. In this case, it is only fair that the person requiring the subsequent connection should bear an appropriate proportion of the cost of the initial connection and that the person who had the initial connection should have his costs abated accordingly. Otherwise, the second person would be free-riding on the first person. I am tempted to call those persons "A" and "B" but I have got away without doing that so far.

This situation is catered for in Section 19 of the Act. That section is being amended by Clause 46 to reflect the separation of supply and distribution. However, the present drafting of the clause inadvertently limits the scope of the provision to the circumstances where the first person requiring the connection--who is called the "initial contributor" in the Bill--is the owner or occupier of the premises connected.

Section 16(1)(a)(i) and (ii) as inserted into the 1989 Act by Clause 44 provides that the person requiring a connection may be either, on the one hand, the owner or occupier of premises or the owner of a distribution system, or, on the other hand, a supplier acting with the consent of such a person.

This amendment widens the scope of Section 19 to include the case where the initial contributor is such a supplier.

Amendment No. 25 is rather more significant. I remind the House of the debate that we had on Amendments Nos. 190 and 191 tabled by the noble Lord, Lord Kingsland, and the noble Baroness, Lady Buscombe. When I rejected those amendments I said that the Government nevertheless accepted the importance of ensuring that the provisions of Clauses 44 to 48, as they now are, supported the making of terms covering all the matters which should properly be covered in the case of making and maintaining a connection even in the largest and most complex cases.

After further consideration, and as I promised last time, after further discussion with the industry, we concluded that the existing provisions did not quite achieve the effect that we wanted. This amendment is the result. It permits a distributor to require a person requiring a connection to accept any terms which it is reasonable in all the circumstances for that person to accept.

Ostensibly, that is a very wide power. But it needs to be borne in mind that this provision comes within the scope of Section 23 of the Electricity Act 1989, as amended by this Bill. Under that section, in the event of a dispute as to the terms offered by a distributor for the making and maintaining of a connection, either party may refer the matter to an authority for determination. So in the end the matter of whether it is reasonable in all the circumstances for a person to be required to accept a particular term is likely to become a matter for determination by the authority where the term is novel or unusually burdensome.

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In the vast majority of connections cases, the terms are likely to be straightforward and to relate to the specific matters described in Section 16A. Only in the larger and more complex cases are the distributors likely to have to rely on the extra scope provided by this amendment.

There is one other aspect to this amendment to which I know the industry attaches especial importance and about which I should say a few words. The existing provisions of Clause 48 provide that a distributor may require a person requiring a connection to accept such terms limiting the distributor's liability for economic loss arising from negligence, as it is reasonable in all the circumstances for that person to accept.

It has been suggested that the existence of the present provision relating to the restriction of liability for economic loss resulting from negligence may impact on the wider-ranging provision which we are proposing to introduce alongside it. The suggestion is that the interpretation of the new provision may be constrained by the present provision and be considered as not extending to cover terms limiting liability in cases other than those covered by the existing provision.

I wish to be quite clear that that is not our intention. For that reason the amendment adds to the beginning of the existing provision, which now becomes paragraph 21(c), the words,

    "without prejudice to the generality of paragraph (b)".

In other words, distributors are free to try to persuade customers to accept terms relating to the limitation of liability which extend beyond those covered by the existing provision. If the customer considers that what is being proposed is unreasonable, he may refer the matter to the authority for determination under Section 23.

As I indicated, we have worked with the industry to make sure that the connection provisions of the Bill achieve what the Government wish and at the same time achieve the effects which the industry considers important. This is a difficult and complex part of the legislation, but I am confident that we have now got it right. I express my gratitude to the industry for the contribution which it has made. I beg to move.

Baroness Buscombe: My Lords, perhaps I may express our support for Amendment No. 25 and thank the Minister for his very helpful clarification of this matter concerning connections. As he stated, it is in response to the amendments which we debated in Committee. I am aware that he has been in consultation with the industry between Committee stage and today. We are very grateful for that. I thank the Minister.

On Question, amendment agreed to.

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Clause 48 [Additional terms of connection]:

Lord McIntosh of Haringey moved Amendment No. 25:

    Page 52, line 32, leave out from ("29;") to first ("any") in line 33 and insert--

("(b) any terms which it is reasonable in all the circumstances for that person to be required to accept; and
(c) without prejudice to the generality of paragraph (b),").

On Question, amendment agreed to.

Clause 50 [General duties of electricity distributors]:

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