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Lord Tombs: I find that response quite encouraging, at least in intent. However, since the Bill proposes the creation of a Great Britain system operator, I cannot see why it should not prescribe this non-discrimination requirement, to which it seems to me that the Minister has subscribed, or to which at least Ofgem has subscribed with his blessing.

Lord Whitty: I am prepared to consider that, but that is not quite the same as what is set out in the amendment. It proposes a requirement to split the company, which I will quite strongly resist. A non-discrimination provision, without commitment, I would be prepared to look at if Members of the Committee give me leave to do so.

Baroness Miller of Hendon: First, I thank the Minister for his comments. I also thank every Member of the Committee who spoke in this debate. Perhaps I may echo the words of the noble Lord, Lord Tombs. There was certainly a suggestion that some kind of compromise could be worked out and brought back.

The amendment made two proposals. It provided an opportunity for a first-class debate of the whole issue. It also offered a little light relief on the other side: the Minister nearly did not have to respond at all. He thought that I had responded to myself. The difference in approach between my noble friend Lord Jenkin, who thought that I was promoting the second part of the argument, and the noble Lord, Lord Tombs, who thought that I was promoting the first part of the argument, was interesting. My poor noble friend Lady Carnegy said that she could not say one way or the other because she was not quite sure what I was promoting. That was difficult.

The truth is that this is a very serious matter. We were lobbied quite strongly by Scottish Power and we have great sympathy with what it had to say. However, while my noble friend Lady Carnegy may not agree, the reason we did not think it fair simply to leave it on the table was not because we thought that we should do the Government's job for them, but that we could see important and interesting elements in the second part of the debate. This is such a difficult and technical area that we need to explore it in detail. We have achieved that end in so far as we must now look carefully at the Minister's words to see whether we can accommodate what he thinks might be acceptable to deal with the problem. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 116C not moved.]

Clause 107 agreed to.

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Clause 108 [Transmission licences]:

[Amendments Nos. 116D and 116E not moved.]

Clause 108 agreed to.

Clause 109 [New standard conditions for transmission licences]:

[Amendment No. 117 not moved.]

Clause 109 agreed to.

Clause 110 agreed to.

Schedule 17 [Conversion of existing transmission licences: licensing scheme]:

Baroness Miller of Hendon moved Amendment No. 117A:

    Page 206, line 31, at end insert—

"(6A) The Secretary of State shall, by an order made under this paragraph, make provision for transitional relief."

The noble Baroness said: In moving Amendment No. 117A, I shall speak also to Amendments Nos. 117B, 118, 118A, 118B and 118C. I apologise to the Minister—I address the noble Lord, Lord Davies—for the somewhat disparate amendments in this group. They are not all quite the same, although they touch on similar things. However, I have tried to put them in order so that the noble Lord can respond to them without having to shuffle his papers as he did on the last occasion. At that time I spoke to my amendments out of order, which was not quite right. I understand that other noble Lords have added their names to various amendments in the group and I am quite sure that their remarks will complement my own brief explanations.

National Grid Transco owns and operates the high voltage transmission network in England and Wales; that is, the National Grid. It sets and recovers charges for connection to and use of its grid system in accordance with the charging statements derived from charging methodologies that it is required to maintain under its transmission licence. Under the terms of the licence, National Grid Transco is obliged to keep its charging methodologies under constant review and to make changes if it believes that such alterations will better meet the relevant objectives specified in the licence. Essentially, these require that NGT's overall charges reflect the costs it incurs and that they facilitate effective competition in the generation and supply of electricity.

In February 2002, NGT commenced such a review. This culminated in proposals subsequently approved by Ofgem which will fundamentally alter the way NGT calculates its charges for, connection to and use of its transmission system. In particular, the revised methodologies have moved some elements of the charges which used to be recovered by way of connection charges into the use of system charges. The new charging arrangements take effect in England and Wales from April of this year.

In December 2002, the Government confirmed that NGT would be appointed the GB system operator once the required BETTA legislation—that is, this Bill—has gained Royal Assent. One of the responsibilities of the GB system operator will be to set GB transmission charges and to maintain the GB

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charging methodologies and associated charging statements from which the GB system charges will be derived.

National Grid Transco has therefore initiated work with a view to developing GB charging arrangements. They will be based on new arrangements that will be implemented in England and Wales in April 2004. Initial analysis suggests that, as a consequence, there will be a significant impact on the charges faced by the generators who are located in Scotland. In particular, Scottish generators will be exposed to a significant and disproportionate burden of GB use of system charges, possibly picking up over 60 per cent of the total of such charges whereas Scottish generation accounts for only around 12 per cent of GB generation. Similarly, customers in the south of England will be disproportionately affected.

Such acute steps are neither appropriate nor desirable and should be avoided. Instead arrangements should be put in place that provide some form of transitional relief, such as phasing, from the initial impact of the new charges resulting from the roll-out of the GB market. That would not be new; precedent exists—for example, when NGC, as it then was, last introduced fundamental changes to its charges in 1993, the full effect was phased in over a number of years.

[The Sitting was suspended for a Division in the House from 4.31 to 4.41 p.m.]

Baroness Miller of Hendon: Given that NGT charges are derived from the charging methodologies provided for in its transmission licence, it could possibly be argued that Clause 106, particularly paragraph (b) of subsection (2), already provides a power for the Secretary of State to modify transmission charges introduced as a consequence of BETTA. However, the powers in Clause 106 are discretionary, and there is no guarantee that the Secretary of State will use the powers to mitigate the adverse effects of the new GB transmission charges.

What is needed, therefore, is something that requires the Secretary of State to provide interim relief rather than simply to do so at his discretion. This is what the amendment seeks to achieve. However, given that National Grid Transco has only just embarked upon the work necessary to introduce GB charges, the amendment does not seek to specify at this early stage the precise nature or the amount of relief that may be required to mitigate the inevitable adverse effects. Instead, it simply requires the Secretary of State to bring forward an appropriate scheme after consulting widely.

Amendment No. 117B seems on the face of it a statement of the impossible. The Secretary of State, from whom only the Prime Minister is higher up the scale, has a duty to publish the text of each licence under a new scheme to deal with existing transmission licences—it is open, transparent government. There is nothing wrong with that, one might think, but

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immediately after establishing the duty, the Bill proceeds to add a caveat; namely, that the text that he publishes may not be authoritative. What does that mean? Is it that the licence does not confer the rights to participate in the transmission of electricity; or is it that the text covers up something that relates to the operation of the licence but that is not published? If either of those is the case, how would the text indicate that it is not authoritative? If the text of a licence is not authoritative, what is the point of issuing it, never mind publishing it?

Amendment No. 118 would delete paragraph 2 of Schedule 17. The paragraph gives the Secretary of State wide—indeed, unlimited—powers to amend a code or agreement affecting transmission licences,

    "if it appears to him to be desirable to do so in consequence of anything for which the scheme makes provision".

The sole criterion for the power to tear up any agreement or code is that the Secretary of State thinks it desirable. In other words, subject to the very limited power of the courts to intervene, the Secretary of State can do very much what he likes, provided he thinks that it is desirable. That is the sole test. I shall not comment further on that amendment, as my noble friend Lord Jenkin wishes to speak to it also.

On Amendment No. 118A, can the Minister explain exactly what sub-paragraphs (1) and (2) of paragraph 4 mean? In particular, will he inform us whether the correct interpretation involves the possibility that the Secretary of State may alter retrospectively a scheme relating to changes to existing transmission licences? Will he also specify whether any scheme relating to changes to existing licences might affect moneys payable or receivable by parties to the altered licences? If that is the case, can he assure the House that no one would be required by the Bill to find sums of money relating to past performance?

Amendment No. 118B is consequential on Amendment No. 117A and would add that holders of generation licences shall be added to the list of those to be consulted about transitional relief, and only transitional relief. Amendment No. 118C is also consequential on Amendment No. 117A and defines "transitional relief" and "use of system charge". I beg to move.

4.45 p.m.

Lord Jenkin of Roding: I tabled Amendment No. 118 because paragraph 2 offended me, for the reasons that my noble friend has given. It seems to leave the matter entirely in the hands of the Secretary of State with, as the noble Baroness put it, very limited power for anybody to question matters or to intervene. So long as the Secretary of State thinks that a provision is desirable, he is entitled to make it.

This is a very extreme version of a form of legislation that was well summed up in a clerihew of many decades ago that appears in the epitome of lawyers' texts on such matters, Megarry's Miscellany-at-Law. It is a great book, which I recommend that the noble Lord, Lord Whitty, read. The following observation has always stuck in my mind: the attitude of modern

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governments—and I am sure that it applies to two of the governments of which I was a member—could be summed up in the phrase,

    "If anything shall seem then the Minister may deem;

    A certificate of demption shall provide complete exemption".

This is a similar situation.

When, from time to time, some of us protest about this form of legislation—my noble friend Lord Peyton expresses his distaste with considerable eloquence—I hope that, somewhere deep in the recesses of departments, people take note. We do not like it. Somehow one must find a better approach. Perhaps, on this occasion, the provision is so minor and consequential to the making of the scheme to which Schedule 17 relates that we ought to swallow our distaste and accept it. However, like my noble friend Lady Miller of Hendon, I find such provisions very distasteful.

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