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Baroness Carnegy of Lour: My Lords, an enormous sum of money is at stake here that will be paid for by consumers of electricity. Should such a sum be added to income tax, there would be outrage, but the Minister suggests introducing the scheme by negative resolution and an order. That is my objection, laudable as it is for those who want to generate in the Highlands and Islands in that way. So my noble friend's amendment is highly desirable.
Baroness Miller of Hendon: My Lords, I definitely support my noble friend's amendment. He has explained it extraordinarily well. We are in a difficult position and I listened carefully to what the noble Lord, Lord Tombs, said about the main amendment, Amendment No. 217H. I also take the point made by my noble friend about what appears to be government policy. I have taken soundings around the industry and it is not upset about it. The industry is relatively satisfied with the amendment and those in Scotland feel that it would be a disaster if it were not placed on the statute book.
I do not want this to sound like a threat, because it is not meant to be but, having said that, I should find it practically impossible to support the government amendment without my noble friend's amendment to it. Because the issue is so complicated; because the sums of money involved are so great; because the scheme runs counter to everything we have ever believed in about charges being cost-reflective, and so on, it is only right that it should be transparent. The Government are obliged to tell us what is necessary. I hope that the Minister will agree, but in my opinion he should be pleased and want to do that. If not, the scheme is very difficult for us to accept.
As for it being introduced by negative instrument, that would be lunacy—that is not parliamentary language, so I withdraw it immediately; it would be very foolish. This is an important matter that should return to the House for discussion.
Lord Triesman: My Lords, a variety of arguments have been adduced during the debate. I must confess immediately that in Grand Committee, I was as surprised as my noble friend Lord Whitty. Although I had caught a glimpse of one article in the Financial Times, eminent newspaper although it is and a great favourite of mine, and was aware that the chief executive of Ofgem had raised the issue that led to that article, it was not immediately apparent to me that there was such widespread disquiet in the industry as has been suggested this afternoon.
Ofgem is an independent regulator and has its role as such, but it is surely the Government's job to take into account wider energy objectives than Ofgem is asked to consider and to legislate if necessary. Those are not the functions of Ofgem. Yesterday, opposition Members moved an amendment to give the Secretary of State power to cap all transmission charges. The Government are taking that power, but only when it is necessary to protect the Government's energy objectives, otherwise leaving charges as set by the National Grid. That is surely the appropriate and proportionate response.
Let me say at once that the Government expect to use that power for only one area, as matters stand. That area is not chosen for random geographical reasons, but because it is characterised by having a high renewables potential and being otherwise liable to be subjected to high transmission charges. In our view, those criteria at present fit only the Highlands and Islands—there may be areas with similar characteristics in the north of Scotland, but we are discussing a fairly circumscribed geographical area because of the criteria, not because of the geography.
If I may say so to the noble Baroness, Lady Carnegy, there is plainly some difficulty in meeting the twin objectives of ensuring that the north of Scotland is not subject to unusually high charges, which most of the residents of that area would find extremely oppressive, but, on the other hand, not making provision that takes account of those requirements. That is why I am slightly surprised by what has been said.
We believe that transmission charging should be cost-reflective, that the scheme should incorporate that aspect, but it will obviously dilute the costs that will be borne by consumers. We think that that is justified where the renewables industry is being established—broadly speaking, it is still in the process of being established; I do not think that anyone could say that it is fully fledged. We think that 10 years is
sufficient to enable the industry to become established and do not believe that an ongoing concession on transmission charges should be required. The sums involved are not likely to be very large, as the noble Baroness, Lady Carnegy, fears. It applies only to renewable generators connected to the transmission system not the distributary system, and only in a specified area. It will be recovered from suppliers of Great Britain as a whole, a point that I made in my earlier introduction to the first part of the Government's statement.I do not intend to make a long statement, but I recognise the seriousness with which some noble Lords have put their points, including the observation by the noble Lord, Lord Tombs, about the rare occurrence of his agreement with Ofgem. I am glad to have been present to celebrate it with him.
Amendment No. 217K produces a scheme, such as that which I have tried to describe, to operate in more than one single area. Amendment No. 217J seeks to make the order effective through an affirmative resolution, as the noble Lord, Lord Jenkin, and the noble Baroness, Lady Miller of Hendon, said.
Baroness Miller of Hendon: My Lords, the noble Lord has got it the wrong way round: Amendment No. 217J is about the area while Amendment No. 217K is about negative or affirmative resolutions. I just wanted to help the noble Lord.
Lord Triesman: My Lords, I appreciate that. All help is gratefully received, particularly in some of these groupings.
The Government have no wish to fast-track proper parliamentary scrutiny where that should occur; it is simply that parliamentary time is finite and the demands upon it great. Although there are no hard and fast rules for the types of orders that should be made through an affirmative or negative resolution, because the measure is technical and relatively narrow in scope—the noble Lord, Lord Jenkin, does not agree with that, but it remains the case—precedent would suggest that the negative resolution procedure is the right level of parliamentary scrutiny for this type of measure. I therefore ask that the amendment be not moved.
In tabling our own amendment which would allow for a dispensation on transmission charges for some renewable generators, we were very careful to ensure that that power would be limited to a single area of high renewable energy potential where transmission charges might have a material impact—as they plainly could, in the north of Scotland—on renewable generation build. I shall not repeat the geographical issues, as those points were made with great power and eloquence in Grand Committee by several noble Lords, including the noble Lord, Lord Gray, when considering the importance of protecting people in the north of Scotland from unreasonable and unrealistic charging. As we said in Committee, our current intention is to specify an area and to meet those concerns. It is right to do so.
It is important that the transmission system is built and charged for in a cost-reflective way. The only legitimate exception to that argument is where that could have a material impact on renewable targets. For that reason, I ask that Amendment No. 217K be not moved.
On Amendment No. 217HA, I welcome the interest that several noble Lords have shown in this regard. We broadly agree with the sentiments expressed; of course the Government must produce a draft proposal on any scheme and consult widely upon it before laying it before Parliament. Equally, the Government will produce a full regulatory impact assessment of the scheme—I give that undertaking. I welcome the intention behind this amendment, but the matter is adequately covered by the government-drafted amendment.
The second part of Amendment No. 217HA, however, would require the Government to produce an annual report on the cost of the scheme to consumers. The cost of the scheme will be set out in the impact assessment. We do not believe that it is necessary to go further and to produce an annual report, as we do not expect the impact on individual customers to vary substantially from year to year. It is worth remembering that the order would be reviewable after five years, at which point the costs and benefits of the scheme will be reviewed. On that basis, I ask that the amendment be withdrawn. I reiterate the point that I made in Grand Committee: the intention is perfectly intelligible but the solution to it is disproportionate.
I shall now respond to Amendment No. 217HL. As in the case of hydrobenefit, we have already considered the amendment, and I undertook, when the noble Baroness, Lady Miller of Hendon, moved the amendment about protecting confidentiality, to consider it properly before the next stage. I thank noble Lords for raising the issue. It fits in particularly well with the set of the amendments that I have addressed.
Lord Jenkin of Roding: My Lords, I recognise that the noble Lord, Lord Triesman, has done his best to help us. I am grateful for his undertakings about the form of consultation. However, I cannot for the life of me see why he should resist including them in the Bill. This is a new proposal for a new subsidy, and it requires thorough consultation.
The provision that I have set out in Amendment No. 217HA is the minimum that should be required for such an issue. I do not believe that what the noble Lord has said will meet the case. I am sorry that he seems so startled. Does he not recognise that the paper prepared by Ofgem has spelt out some very strong arguments? I was very tempted that we should accept them, but I recognise the point made by the noble Lord today and the noble Lord, Lord Whitty, in Grand Committee that in the last resort it is for government and Parliament to set the balance between economic and environmental objectives. I recognise that the
Government are trying to do that, but we need these amendments, or some of them at any rate, written into the Bill. I should like to test the opinion of the House.4.47 p.m.
On Question, Whether Amendment No. 217HA, as an amendment to Amendment No. 217H, shall be agreed to?
Their Lordships divided: Contents, 146; Not-Contents, 125.
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