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Lord Ezra: I support the amendment so clearly moved by the noble Lord, Lord Jenkin of Roding. It seems wrong that those on pre-payment meters should be prevented by law, as matters now stand, from benefiting from the various energy packages which, in other legislation, have been stimulated by government in order to achieve government objectives. Bearing in mind the wide range of people who use pre-payment meters for various reasons, as the noble Lord, Lord Jenkin, pointed out, this should be put right and the noble Lord has tabled an amendment for so doing. It may or may not have the correct wording, but I fully endorse the principle behind it.

Baroness Miller of Hendon: My name is also on the amendment. It is totally unnecessary for me to add anything to the clarity with which my noble friend Lord Jenkin moved the amendment and the extra words added by the noble Lord, Lord Ezra.

Lord Whitty: As I understand the noble Lord, Lord Jenkin, he will withdraw Amendment No. 116 in favour of Amendment No. 132C, which gives the power to propose, consult and in due course regulate on an extension of the range of debt that can be collected from a pre-payment meter. At the moment there is a little flexibility in that any proposed regulations will be subject to the approval of the Secretary of State.

Clearly there are a number of inflexibilities in the present system which the amendment may well address, and there is no particularly good reason for maintaining the block on it. The noble Lord is right to say that we have considerable sympathy with what he is trying to achieve. Whether this is the best way in which to achieve it I will leave to the Committee to explore between now and subsequent stages. However, it is the Government's intention to bring forward an amendment to deliver what all noble Lords who have spoken are seeking to achieve with Amendment No. 132C.

3.45 p.m.

Lord Jenkin of Roding: We have started off on an extremely co-operative note; I hope that it will be maintained for the rest of today. I am grateful for what the noble Lord, Lord Whitty, has said. We look

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forward to seeing the amendment that the Government will bring forward on Report. In the mean time, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 116A:


    After Clause 106, insert the following new clause—


"LICENCE MODIFICATIONS RELATING TO THE RENEWABLES OBLIGATION
After section 15A (licence modifications relating to new electricity trading arrangements) of the 1989 Act insert—
"15B LICENCE MODIFICATIONS RELATING TO THE RENEWABLES OBLIGATION
(1) The Secretary of State may, in accordance with this section, modify the conditions of licences of the type mentioned in subsection (1)(d) of section 6 for the purpose of introducing or implementing arrangements for the prevention of certain breaches of the renewables obligation by the licence holders.
(2) Before making modifications under this section, the Secretary of State shall consult the holder of any licence being modified and such other persons as he deems appropriate.
(3) Any consultation undertaken by the Secretary of State before the commencement of this section shall be effective, for the purposes of subsection (1), as if undertaken after that commencement.
(4) Where the standard conditions of licences are modified under subsection (1), the Secretary of State shall make the same modifications of the standard conditions for the purposes of their incorporation in licences of that type granted after that time.
(5) The Secretary of State shall publish any modifications—
(a) in writing to all holders or applicants for licences who may be affected by such modifications, and
(b) by publishing the modifications in at least two national daily newspapers and any appropriate trade journal or journals.
(6) The power of the Secretary of State under this section may not be exercised after the end of the period of two years beginning with the passing of the Energy Act 2004.""

The noble Baroness said: Amendment No. 116A would enable arrangements to be established that will prevent certain kinds of breach of the renewables obligation by suppliers of electricity. The precise form of the arrangements to be established is to be determined in accordance with the power provided for by the amendment. Under this provision, the Secretary of State is given the power to amend the standard licence conditions of suppliers who have the obligation to supply a proportion of renewable energy and whose compliance with the obligation is evidenced either by the production to the authority of renewables obligation certificates, known as ROCs, or by a payment into the buy-out fund.

The intent behind the amendment is to give the Secretary of State power to introduce a licence condition obliging suppliers to be signatories to a renewables obligations code. It is intended that the code would, in accordance with the terms of the licence condition, be designated by the Secretary of State. The code would contain conditions as to its amendment which are in similar terms to the conditions for the amendment of the balancing and settlement code: that is, specified parties may propose amendments provided those amendments satisfy or can be claimed

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to satisfy the amendment criteria contained in the licence and the code; the proposal is examined in accordance with the same criteria and by means of a pre-determined procedure and, following a final review by the governing panel, a recommendation to amend or not to amend is made to the authority; and the authority approves or rejects the panel's proposal on the basis of the same criteria used by the proposer and the panel.

Currently, the Secretary of State has no specific powers to make the proposed licence amendments. Therefore, a power is required to be introduced if a licence amendment for the specified purposes is to be made. The power given by the amendment is similar to the power granted to the Secretary of State to enable NETA provisions to be brought into effect. The scope of any licence obligation or code that may be developed under the amendment should be limited only to whatever is strictly necessary to enable the authority to carry out its administrative duties with the greatest efficiency. It should not be used to introduce policy issues, nor should it be within the power of the authority to introduce licence conditions that may directly or indirectly affect competition between suppliers.

In modifying suppliers' licences in this manner, the Secretary of State would be acting within the scope of his functions and the stated objectives of the Government as regards renewable sources under Clause 32, which permits the Secretary of State to impose renewables obligation on suppliers.

My commentary on the amendments is as follows. The amendment has been drafted as an amendment to the Electricity Act 1989, as amended by the Utilities Act 2000, in order to avoid the need to make further consequential amendments. Subsection (1) in Amendment No. 116A introduces the power to make an amendment to licence conditions to achieve the intended aim. Subsection (2) requires the Secretary of State to consult as he deems fit. Subsection (3) allows the Secretary of State to consult before the amendment comes into effect with the aim of achieving the intended aim as soon as practically possible. Subsection (4) provides that new licences shall contain the amended licence condition. Subsection (5) provides for the publication of the amended licence conditions.

Members of the Committee will notice that the method of publication is the same as that for which I have been asking in the case of other licence variation provisions and not that for which the Government have been asking, which is,


    "in any manner the Secretary of State considers appropriate".

Subsection (6) allows the amendment to be made at any time up to a final date of two years after the Energy Act 2004 comes into force.

I hope that the Government will accept this as a constructive amendment designed to facilitate and improve the regulatory licensing regime. I beg to move.

Lord Davies of Oldham: We appreciate the constructive approach taken by the noble Baroness

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and the Opposition to this area. She will recognise that, in response to that constructive approach, we said that we would take on board several of the points made during our last Committee sitting about the renewables obligation and securing the buy-out fund, and that we would bring forward amendments on Report to incorporate the fresh position. However, we do not believe that Amendment No. 116A helps the situation. I shall now identify the reasons why.

As the noble Baroness said, the amendment would enable the Secretary of State to make changes to the renewables obligation by means of modifying the licence conditions. As Members of the Committee will be aware, at present any changes require the affirmative resolution of both Houses. Given the importance of the renewables obligation, the Government cannot accept the reduction of parliamentary scrutiny that this would involve.

In addition, the amendment does not make it clear which breaches of the renewables obligation are intended to be covered by licence modifications and which would still require legislation. It is clearly essential that any changes impacting significantly on the obligation—thus materially affecting the prospects of achieving the Government's aim of increasing the contribution of renewables—should receive proper parliamentary scrutiny.

The Committee will be aware that the renewables obligation is a complex instrument with a number of interacting provisions. What appears at face value to be a minor or technical change may have far-reaching consequences. We need to assess those consequences before taking precipitate action, and the present system enables us to undertake that full and proper assessment.

I understand the desire on the part of the Committee and, in particular the noble Baroness, Lady Miller, in pressing her amendment, for a more flexible mechanism to make changes. However, we do not believe that that is the right way to achieve it. We are all aware that the shortfall in the renewables obligation as a result of the failure of TXU (UK) Ltd required changes to be made to the obligation in respect of late payments, and those changes are being progressed quickly.

I am not sure that use of the licence conditions route would save much time in the circumstances. The Committee will recognise that action has been taken since last October and changes in that regard are almost complete. I cannot see, therefore, how effective action could have been achieved any faster against the background of noting how important it is for a full assessment—through Parliament in its proper role of scrutiny—of the implications for the renewables obligation.

I want to reassure the noble Baroness that we take very seriously issues concerning the renewables obligation. We have already undertaken to move some way towards meeting certain of the issues defined by the Opposition, but we do not think that the amendment is acceptable. On that basis, while

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indicating our support for the proposals set out in the earlier amendments, I ask the noble Baroness to withdraw the amendment.


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