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I say to the noble Lord, Lord Rogan, that I think this is a perfectly appropriate use of parliamentary procedures. I admire the ingenuity of the amendment’s supporters for the way in which they brought their case to your Lordships’ attention. I suspect that if I survive even a year—which, as the noble Lord suggested, seems to be the average length of stay—I will have many more opportunities to debate this matter in the months ahead.
The noble Lord, Lord Rogan, talked about Churchill’s reference to the “sluggish inertia” of the minds of those who opposed this proposal. I recognise that. What Eskimos do in the winter was mentioned, which enlivened all of us, although, thinking about the relationship between Eskimos and climate change, I suspect that there is a salutatory point to be made about the huge impact that climate change will have on our society and on many other societies in the years ahead. That brings us back to the importance not just of this Bill but of the Climate Change Bill. It shows how this discussion is an important part of a general debate about where we are going with energy use. I fully accept that this has been a serious debate.
My noble friend Lady Billingham pointed out that the UK experiment with daylight saving in 1968 to 1971 is now some 40 years ago. She is right, but I do not think that we can just ignore what happened then. It is worth making the point that an experiment was conducted over three years, after which Parliament voted decisively—by 366 votes to 81—to return to the current arrangements. I appreciate that time has moved on and that the focus on energy saving and climate change has shifted, so the matter is understandably being raised again and should be given the attention and consideration it deserves.
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I say to the noble Lord, Lord Rogan, and my noble friend Lord Hoyle that I am aware of the Cambridge University report, which concluded that if time in the UK were set at GMT plus one, there would be a reduction of 2 per cent in UK electricity consumption, which is of course significant. However, the Cambridge study does not cover other forms of energy such as heat and transport. The study therefore covers only part of the picture. I say to my noble friend Lord Hoyle that we will of course continue to look at relevant studies. If other research comes forward that suggests that there is persuasive evidence in this area, of course, my department and the Government will consider it.
Other noble Lords mentioned the Building Research Establishment work for my other department, Defra, in 2005, which indicated that putting clocks forward an additional hour in winter and summer would lead to increased energy consumption in UK buildings for lighting, space heating and cooling, with consequent increases in carbon emissions. All I say on that is that a number of factors must be considered in relation to research before one can come to a definitive view. I am advised that numerous other studies have failed to show with any authoritative statistical evidence that any energy savings in the practical experiments undertaken in other countries would be likely to translate into carbon savings as a result from a change in time zone. I should have thought that, on such a significant issue, the evidence must be overwhelming.
The noble Baroness, Lady Carnegy, said that there was nothing wrong with the amendment, although clearly she has some doubts about whether we should move to daylight saving. The noble Lord, Lord Monson, put his finger on it: the amendment requires in primary legislation that the Government report on the matter annually. One ought to point out that, in the main, your Lordships' House is cautious about putting more responsibilities on government, especially in issuing reports on matters on which there is no guarantee that any action is to be taken. Although on the face of it this is a mild amendment that simply asks the Government to make a regular report, one needs to be very careful before one commits us to do that.
European time zones have been amply covered. As the noble Lord, Lord Monson, says, due to its very happy expansion, which this country has championed for a number of years, the European Union now covers three different time zones, so unity of time is no longer possible in it.
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There is an argument about road safety. It is a great pleasure to hear my noble friend Lady Gibson speak on behalf of RoSPA, an organisation for which I have considerable admiration, not least as its headquarters are in Birmingham. As Health and Safety Minister in the Department for Work and Pensions, I had a great deal to do with RoSPA and greatly appreciate all the work that it does. If it were shown that the number of deaths and serious injuries on roads could be reduced, that would be taken seriously. However, although light may be a factor, I understand that research models do not take account of other factors such as traffic volume
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The noble and learned Lord, Lord Howe of Aberavon, made very entertaining remarks about daylight saving and his experience in the cinemas of Russia and central Asia.
Surely it is one of the great strengths of the Union that we consider the interests of Scottish farmers and the people who live in the north of Scotland. We should not shy away from that. It is part of the cultural integrity of the United Kingdom that we consider them. I am proud of that; we should not run away from it.
In any consideration of daylight saving, one has to consider the points of view expressed by postal workers and the potential increase in the risk of accidents, caused by the darker mornings, involving a wide range of people who are active during those hours.
This matter has been discussed on a number of occasions in the past 30 years, but in no sense could it be said that there is an emerging consensus. These matters should be kept under review, and the Government will continue to keep them under review, but I hesitate to recommend to your Lordships that they should support an amendment that requires an annual report to Parliament. On that basis, I invite the noble Viscount not to press his amendment to a vote.
Viscount Montgomery of Alamein: My Lords, I thank my noble friend Lord Jones of Birmingham for his important maiden speech from the Cross Benches, and I congratulate him on his birthday. He seems to be everyone’s noble friend, in view of what the Minister said, which is even more encouraging. We certainly have a man for all seasons, which is to be welcomed.
We have had remarkable and overwhelming consensus in favour of doing something about this, so the Minister’s reaction was customary and disappointing. Interestingly, he mentioned the farmers in the north of Scotland, but surely there must be a limit to the extent to which the tail wags the dog. A small minority of people live right in the north of Scotland. To what extent do we always have to kowtow to them and not consider the overwhelming wishes of a vast majority of people in England, Wales and, as we have heard, Northern Ireland? This is a rather strange attitude to take. The statistics have been proved by noble Lords who have spoken in this debate. They are too numerous to mention and I thank them all. We have had powerful support. I am sorry that the Minister disparaged what the noble and learned Lord, Lord Howe, said. It seemed a very valuable and cogent contribution.
Lord Hunt of Kings Heath: My Lords, I do not think that I did disparage what the noble and learned Lord said. I paid tribute to him for his admirable speech. As I have said, of course the Government will continue to look at research evidence that becomes available, but I did not think that this Bill was the way
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Viscount Montgomery of Alamein: My Lords, I accept that wholeheartedly. But I was rather disappointed that the Minister also said that he looked forward to debating this on many other occasions. We all wish that he will stay for a long time in the job because he has been a very efficient Minister. I have had arguments with him previously on other subjects and he is a very reasonable man, but that does not mean to say that this matter should not move forward to action. If action cannot be taken under this Bill, we need a new Bill and we need the Government to introduce it. We have had Back-Bench Bills from both Houses over a long period.
The noble Lord referred to the experiment, which, as he said, was 40 years ago. Since then, things have moved on a great deal in all senses, not only in this country but in continental Europe. Surely the time has come for this matter to be given serious consideration. It should not be pooh-poohed, pushed aside and put into more debates. We need from this Government, or any Government who may succeed them, action. We want action in the next Session of Parliament. If we do not have that, we must have it thereafter. I hope that that will happen. I am not very optimistic, but one has to try to be optimistic. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker (Lord Geddes): My Lords, before calling Amendment No. 16, I must advise the House that if it is agreed to I cannot call Amendments Nos. 17 to 20 due to pre-emption.
Lord Hunt of Kings Heath moved Amendments Nos. 17 to 20:
18: Clause 80, page 73, line 20, leave out “to (3), and” and insert “and (1C),
( ) for subsections (2) and (3) substitute—
“(2) “Reporting period”, for the purposes of subsections (1) to (1AA), means—
(a) the period beginning with 24th February 2008 and ending with 31st December 2008, and
(b) each successive calendar year.
(3) A sustainable energy report must be published during the period beginning with 1st January and ending with 31st October following the reporting period to which it relates (“the publication period”).”, and”
On Question, amendments agreed to.
Lord Jenkin of Roding moved Amendment No. 21:
21: After Clause 80, insert the following new Clause—
“Electricity distribution“Charges relating to connections
(1) Section 16A of the Electricity Act 1989 (c. 29) (procedure for requiring a connection) is amended as follows.
(2) For subsection (3), substitute—
“(3) The person requiring a connection shall also—
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(a) give the distributor such other information in relation to the required connection as the distributor may reasonably request; and
(b) in relation to charges attributable to the costs of giving a notice under subsection (5), pay to the distributor amounts of such description, to such extent, and in such circumstances as may be prescribed by the Authority with the consent of the Secretary of State.”
(3) In subsection (5) for “any information” substitute “anything”.”
The noble Lord said: My Lords, I must begin with an apology to the House that this amendment will not be as entertaining as the previous one. I am tempted to tell one story, but I shall resist the temptation and get straight ahead with my amendment, which deals with an important issue of concern to those who operate electricity networks. If the amendment is accepted—I hope that the Government may feel able to accept it—it would change Section 16A of the Electricity Act 1989 to regularise a current industry practice that has been recognised by Ofgem, the regulator, as reasonable and efficient.
The amendment aims to put what are known throughout the industry as assessment and design charges—I shall refer to them as A and D charges—on a proper legal footing. A and D charges are levied up front by distribution network operations—which I shall refer to as DNOs, if the House will forgive me—when managing certain connection requests. The charges cover the costs involved in assessing the impact of a connection request on the distributor’s network and the costs involved in designing the network connection. These costs can run into many thousands of pounds. It is only fair that they should be paid by those seeking connection to the network rather than spread out among all network users.
However, there have been a number of complaints. Earlier this year a number of DNOs sought legal advice and were told that the practice of recovering assessment and design costs up front was not permitted under the relevant legislation—most notably, Section 16A of the Electricity Act, which I referred to a moment ago, does not allow for it. The practice was therefore considered to be in breach of the law. The regulator, who had previously approved of up-front A and D charging as a sensible cost-reflective measure, has therefore felt unable to continue to do so. The practice was endorsed in the connection methodology statements of the DNOs which have to be approved by Ofgem under the standard conditions of the electricity distribution licence, but because of this recent legal advice on the issue, Ofgem has now required the DNOs to cease the practice of up-front A and D charging despite the obvious economic justification for it.
The industry has come to the conclusion that the only way to put this right is by a legislative provision, and this Bill obviously provides the right place to do that. An amendment to Section 16A of the Electricity Act would simply take us back to the previous position, one which everyone thought existed at the time. Ofgem itself has recommended that the Act should be amended in order to permit the practice,
The inability the recover up-front A and D charges under the existing statutory scheme for network connections has urgent and material commercial implications for DNOs.
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We have before us the Energy Bill and I have brought forward this amendment which I hope will put the situation right. All it does is to re-enact paragraph (a) of existing subsection (3) of Section 16A and split it into two paragraphs. Paragraph (a) would simply repeat the substance of existing subsection (3) while paragraph (b) is new and would enable distributors in future to recover A and D charges up front,
as set out in any regulations made by Ofgem with the Secretary of State’s consent. This approach would enable Ofgem to regularise the practice promptly and effectively—and of course there have been and will be further wide public consultations—while at the same time ensuring that consumer interests are protected and that there are no detrimental consequences for the current competitive market in connections work.
This is a minor matter, but to those who operate these systems, it is of considerable importance. I beg to move.
Lord Davies of Oldham: My Lords, I am delighted that the noble Lord, Lord Jenkin, and I are able to resume our constructive relationship regarding this Bill. When we considered the Bill on Report on the previous occasion, we made some progress on the amendments he tabled, and today he has again identified a significant issue which affects this group of operators. In order to give the noble Lord a constructive response to his amendment, while not fully accepting it, I need to embellish one or two points he made—although in deploying his case he did accurately identify the issue. This is a technical matter and therefore the House will recognise that I am obliged to indulge in some technicalities.
Requests for network connections most commonly arise in the context of new developments—for example, a new housing or commercial development or industrial site. They can also be required by smaller users such as people building their own homes on sites that are not already connected to the grid. It is a statutory obligation for a distribution network operator to provide a connection offer. On considering an application with a view to making an offer for connection, DNOs incur assessment and design costs. As the noble Lord made clear, these costs can be significant. They relate to expenses on the design carried out by the distributor for the connection between the customer’s premises and the network and the costs of assessing the most appropriate point on its distribution system for the connection, including whether upstream reinforcement is required.
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These costs can be incurred by the DNOs even if an offer for a network connection is not accepted and a network connection not provided. There are several reasons why the costs might still obtain even if the connection is not effected. First, connection requests can be of a speculative nature, especially those related to new build housing developments and retail parks. Developers often request a formal connection offer when assessing the viability of certain projects to ensure that the required capacity can be delivered and to obtain certainty over connection costs. Such requests,
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Another reason stems from arrangements put in place by Ofgem in 2000 to allow other players to compete with DNOs to provide network connections. Competition has led to the emergence of independent connection providers, many of whom are also independent distribution network operators. These have been allowed to compete to provide connections and Ofgem regarded this competition to be healthy and in the consumers’ interests. Competition for certain elements of the network connection means that there may be several ICPs bidding for a connection, but only one—or perhaps none—will secure the contract.
But the DNO, because of its statutory obligation, has nevertheless to carry out the assessment and design work for each bid and, of course, incur the costs involved in that exercise. Until recently, with Ofgem approval, the DNOs charged an up-front payment of assessment and design costs from connection applications. This practice was set out in their charging methodologies and allowed the DNOs to charge in the event that an applicant decided not to proceed with a network connection, thereby, of course, limiting the number of otherwise speculative applications. Earlier this year—the noble Lord reflected on this point—an independent distribution network operator filed a complaint about this charging methodology on the basis that it was anti-competitive and unlawful. Since the case was brought forward, legal advice has confirmed that up-front charging for assessment and design fees is not supported in statute through Section 16A of the Electricity Act 1989 and is, therefore, unlawful. Following a letter from Ofgem in August, the DNOs have stopped charging up front for assessment and design fees.
Of course the Government and Ofgem have sympathy with the position in which the DNOs now find themselves. The practice of up-front charging has been a feature of how the market has operated in recent years. We concur that the practice is a reasonable and efficient way of recompensing the DNOs for the work that they do while at the same time providing protection against the abuse of a DNO’s obligation to provide an offer to connect on request from a wildly speculative initiative.
However, Ofgem acknowledges the need to do further work to establish the degree of merit in the complaint from the DNO about the practice of up-front charging being anti-competitive. So, while Ofgem is willing to support a mechanism whereby DNOs could charge for work that they carry out for assessment and design of network connections in certain circumstances, it wants to ensure that there is a proper and appropriate balance to be struck between compensating the DNOs, protecting consumers and facilitating competition. Although we appreciate that DNOs have not previously charged for small domestic connections, we need to be careful and to guard against allowing for up-front charges to be levied for such connections as a result of any change in primary legislation.
In sum, we agree with the intention of the noble Lord’s amendments, and he will draw solace from that. I hope I can satisfy him by saying that, although I
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I hope the noble Lord will accept that, yet again, I have tried to be constructive in response to his very constructive point on this issue. We want to think further about it and we will come back at Third Reading with a carefully drafted amendment, if he will withdraw his today.
Lord Jenkin of Roding: My Lords, I am grateful for that. It would be a miracle if something drafted by anyone other than parliamentary counsel actually met the Government’s requirements. Occasionally it happens, but I well understand that on most occasions it does not. We will have to look at the amendment that is brought forward at Third Reading. I hope, as with others, that we may see it a day or two in advance so that we have an opportunity to consult and perhaps, if necessary, table amendments to it.
I do not think this is the last occasion today on which we shall discuss the question of connections to the grid; I suspect they may come up in future debates. On this one, however, I am happy to beg leave to withdraw the amendment.
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