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Lord Greenway: My Lords, I warmly welcome these amendments which, as the Minister said, go slightly wider than the two clauses which were written into the Bill during its passage through this House. The noble Lord, Lord Higgins, who is otherwise engaged in the House at the moment, and I raised the concerns of the maritime industries in connection with the proposed siting of offshore wind farms in relation to the dangers of interfering with well recognised shipping lanes.

What the Government are now proposing meets nearly all our concerns. For that, I should like to express my gratitude, which I am sure will be echoed by my colleagues in the maritime industries. I do not think that it would be correct for me to thank the Minister on behalf of the noble Lord, Lord Higgins. Perhaps the noble Baroness on the Opposition Front Bench would do that.

Lord Dixon-Smith: My Lords, will the Minister give the House an assurance that, from here on, shipping will be able to miss maritime wind farms? At Question Time about six weeks ago, the noble Lord, Lord Whitty, said something to the effect that shipping could not possibly miss maritime wind farms.

Baroness Miller of Hendon: My Lords, as the noble Lord, Lord Greenway, said, on behalf of my noble friend Lord Higgins—on behalf of everybody, really—we welcome these changes to navigation which have been so well championed. We are grateful to the two noble Lords who spent so much time, in so many debates, discussing these proposals, and to the Government, for agreeing to what is before us.

Lord Triesman: My Lords, the intention of everybody in this matter has been that shipping should miss these installations. That seems a prudent step. I suspect that the best way to answer the question of the noble Lord, Lord Dixon-Smith, is to say that I am sure there will be some adjustments to the way in which navigation operates with respect to the installations. We now have a framework in which the obligations of all parties are well defined. I am very grateful to all noble Lords who have pressed the argument to this conclusion.

On Question, Motion agreed to.
 
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COMMONS AMENDMENTS
17 Clause 118, page 95, line 15, leave out from beginning to "insert" in line 26 and insert—
"( ) For subsection (3) of that section substitute—
"(2A) An order under section 32 may provide that, where—
(a) a renewables obligation is one in relation to which provision made by virtue of subsection (1)(b) applies in the case of the electricity supplier who is subject to the obligation, and
(b) the period ending with such day (after the day by which the obligation had to be complied with) as may be specified in or determined under the order has not expired,
the taking of steps under section 27A in respect of a contravention by that supplier of that obligation is prohibited or otherwise restricted to the extent specified in the order.
(2B) An order under section 32 may provide that, in a case in which the amount received by the Authority, or by the Northern Ireland authority, by way of discharge payments for a period falls short of the amount due in respect of that period, persons who—
(a) were subject to renewables obligations for the relevant period, and
(b) are of a description specified in or determined under the order,
must, by the time and in the circumstances so specified or determined, make a payment (or further payment) to the Authority of an amount calculated in the manner so specified or determined.
(2C) An order under section 32 may not by virtue of subsection (2B) confer an entitlement on the Authority to receive a payment in respect of the shortfall for any period—
(a) in the case of a shortfall in the amount received by the Authority, if the receipt of the payment is to be while a prohibition or restriction by virtue of subsection (2A) applies, in one or more cases, to the taking of steps in relation to contraventions of renewables obligations for that period; or
(b) in the case of a shortfall in the amount received by the Northern Ireland authority, if the receipt of the payment is to be while a prohibition or restriction by virtue of a corresponding provision having effect in Northern Ireland applies, in one or more cases, to the taking of steps in relation to contraventions of Northern Ireland obligations for that period.
(2D) The provision that may be made by virtue of subsection (2B) includes—
(a) provision for the making of adjustments and repayments at times after a requirement to make payments in respect of a shortfall for a period has already arisen; and
(b) provision that sections 25 to 28 are to apply in relation to a requirement imposed by virtue of that subsection on a person who is not a licence holder as if he were a licence holder.
(3) The amounts received by the Authority by virtue of the preceding provisions of this section must be paid by it to electricity suppliers in accordance with a system of allocation specified in an order under section 32."
( ) In that section, at the end"
18 Page 95, line 29, at end insert—
"(7) For the purposes of this section—
(a) the amount received by the Authority by way of discharge payments for a period falls short of the amount due in respect of that period, and
 
15 Jul 2004 : Column 1388
 

(b) the amount received by the Northern Ireland authority by way of discharge payments for a period falls short of the amount due in respect of that period,
if, and to the extent that, the Authority or (as the case may be) the Northern Ireland authority would have received more by way of discharge payments if every renewables obligation or (as the case may be) Northern Ireland obligation for that period, so far as it was not otherwise discharged, had been discharged by payment.
(8) In this section—
"discharge payment", in relation to a period, means—
(a) a payment by virtue of paragraph (a) of subsection (1) for discharging (in whole or in part) an electricity supplier's renewables obligation for that period;
(b) so much of a payment by virtue of paragraph (b) of that subsection for securing that such an obligation is treated as discharged to any extent as does not exceed the payment that would have discharged that obligation to the same extent if it had been made before the day mentioned in that paragraph; or
(c) so much of any payment to the Northern Ireland authority as corresponds, in relation to a Northern Ireland obligation for that period, to anything falling within paragraph (a) or (b) above;
"Northern Ireland obligation" means a renewables obligation of a Northern Ireland supplier under Article 52 of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6));
"the relevant period"—
(a) in relation to a shortfall in amounts received by the Authority by way of discharge payments for a period, means that period; and
(b) in relation to a shortfall in amounts received by the Northern Ireland authority by way of discharge payments for a period, means any period that includes the whole or a part of that period.""

Lord Whitty: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 17 and 18.

These amendments take further steps to reduce the impact of a future shortfall in the renewables obligation buy-out fund so as to improve investor confidence. I think we know what lies behind this from the discussions we had in Committee and elsewhere. The noble Lord, Lord Jenkin, was prominent in those.

The arguments for mutualisation have been put forward here and in another place. They reflect the failure of TXU and, more recently, Atlantic Electric and Gas. That strengthens the case for mutualisation. However, it must be remembered that the renewables obligation is a market mechanism and, as such, there is always an element of risk—companies can, and do, fail. Therefore, a balance must be struck between reducing the impact of shortfalls in the buy-out fund while at the same time avoiding undue additional burdens on consumers or adversely affecting competition. This means that although the amendment reduces the impact of a shortfall to suppliers, it does not entirely remove the risk of it happening in the first place.

The amendment is not a complete answer to removing all risk, and I do not think that it can be. But taken together with other measures contained in
 
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Clause 118, such as reducing the length of obligation periods and imposing surcharges on late payments, I think that it offers a balanced response to the problem.

Before changes are made to the renewables obligation order, we will need to engage in detailed consideration of issues such as how the payments are assessed, when the suppliers need to make those payments, and over what period those payments are to be made. As part of this consideration, a statutory consultation exercise will take place later this year, when these issues will be addressed.

I think that the noble Baroness, Lady Miller of Hendon, will shortly be moving her amendment, for which I have some sympathy. I shall reserve my remarks on her amendment until I have heard her speech.

Moved, That the House do agree with the Commons in their Amendments Nos. 17 and 18.—(Lord Whitty.)

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