Ninth Report
Energy Bill
1. This six-part bill deals with a number of
topics, including gas importation and storage, electricity from
renewable sources, decommissioning of energy installations, oil
and gas licensing and smart meters. The Department for Business,
Enterprise and Regulatory Reform has provided a memorandum (printed
at Appendix 1) on the delegations of legislative power in the
bill, some other powers and the principal alterations to existing
delegated legislative powers. There are also provisions affecting
existing powers at clauses 38(2), 84(3), 87(3) and 90.
Gas importation and storage
DEFINITION OF "GAS" — CLAUSE 2(4)
2. Clause 2(1) prohibits the carrying on without
a licence of various activities specified in clause 2(3). These
activities relate to "gas" as defined in clause 2(4).
This definition enables the Secretary of State, by order subject
to negative procedure, to designate additional substances to come
within the definition. Though this power is to extend the scope
of Chapter 2 of Part 1 of the bill, it is in practice constrained
by the nature of the activities which are licensable (which relate
to activities in, under or over the territorial sea or waters
in a Gas Importation and Storage Zone). There is a similar power
in the Gas Act 1986 (also subject to negative procedure) and we
do not consider it inappropriate.
OFFENCES RELATING TO LICENCES — CLAUSES 9 AND
23
3. Clause 9(1)(d) enables the Secretary of State,
by order subject to negative procedure, to specify provisions
of a licence under clause 4 the breach of which is a criminal
offence. The maximum penalties are specified in clause 9(5) and
comprise only fines. There is a similar power at clause 23(1)(d)
relating to licences under clause 18 (carbon dioxide storage).
Again, the maximum penalties are specified in the bill - at clause
23(3) - but in this case a two year prison sentence is possible.
Given the way in which the power is circumscribed, we do not consider
the level of control to be inappropriate.
INSPECTORS — CLAUSES 13 AND 27
4. Clause 13(3) enables the Secretary of State,
by order subject to negative procedure, to specify the powers
and duties of inspectors appointed to assist in carrying out the
Secretary of State's functions under Chapter 2 of Part 1 (importation
of and storage of combustible gas). The regulations may create
criminal offences. The maximum penalty is specified in the bill
(fines only). Clause 13(4) enables the regulations to confer powers
similar to those set out in section 108(4) of the Environment
Act 1995 (powers of entry, investigation etc.), but that is not
exhaustive; the regulations could include additional or different
powers. There is a similar power in clause 27 relating to Chapter
3 of Part 1 (storage of carbon dioxide).
5. These powers are based on those in section
20 of the Petroleum Act 1998 (paragraphs 30 and 47 of the memorandum).
That Act is a consolidating Act and section 20 has its origins
in section 27 of the Petroleum and Submarine Pipelines Act 1975:
a precedent which pre-dates the establishment of this Committee.
6. The memorandum states that the powers and
duties will need to be amended in accordance with changes to licence
conditions (paragraph 30) or to reflect the development of storage
activities etc. (paragraph 47). But we consider it inappropriate
for so open-ended a power to be subject only to negative procedure.
Unless the delegation is limited to conferring the powers specified
in section 108 of the 1995 Act (subject to any necessary modification)
we consider that regulations by the Secretary of State under clauses
13 and 27 should be subject to affirmative procedure.
TRANSFER OF FUNCTIONS — CLAUSE 34
7. Clause 34(1) enables the Secretary of State
by order subject to negative procedure to transfer to any other
person, whether in the public or the private sector, his functions
under Chapter 3 of Part 1 (carbon dioxide storage). Powers to
make regulations or orders are the only powers which may not be
transferred. The memorandum (paragraph 62) gives examples of the
powers that might be transferred. A similar power is conferred
on Scottish Ministers by clause 34(12).
8. The order may make consequential amendments
to section 188 of the Energy Act 2004. The Henry VIII element
is therefore limited.
9. It appears from paragraphs 96 to 98 of the
Explanatory Notes (references to "another authority"
and "transferred to another authority") and paragraphs
66 and 67 of the memorandum that the main purpose of the clause
may be to enable transfer of functions only to a public sector
body. But the power is not limited in that way; so the instrument
giving effect to the transfer might prove controversial in view
of the public nature of the functions to be transferred. We
consider that the exercise of this power should be subject to
affirmative procedure unless the bill limits the scope of the
delegation to provide only for a transfer to a public sector body.
Nuclear decommissioning regulations — clause
51
10. Clause 51 enables the Secretary of State,
by regulations subject to negative procedure, to make provision
about various matters connected with nuclear decommissioning.
It is based on section 111 of the Energy Act 2004, which relates
to decommissioning of renewable energy installations etc.. Despite
the fact that the power relates to nuclear installations, the
negative procedure is not inappropriate because no major point
of principle is involved.
Smart meters — clause 81
11. Electricity distribution and supply licences
and gas transporter, supply and shipping licences are granted
by the Gas and Electricity Markets Authority ("GEMA").
The licences may contain conditions particular to one or more
licences and/or standard conditions, which are conditions originally
determined by the Secretary of State but modifiable by GEMA, following
procedures set out in the Gas Act 1986 or the Electricity Act
1989.
12. Clause 81 enables the Secretary of State
to modify particular or standard conditions of licences, for the
purpose of requiring the licence holder to provide etc. meters
of a particular kind. Unusually, the bill provides for a parliamentary
procedure (negative draft) for use of the power, explained at
paragraphs 128 to 132 of the memorandum. The Secretary of State's
powers to alter the standard conditions (e.g. given by section
68 of the Utilities Act 2000, or section 134 of the Energy Act
2004 or to be given by clause 86 of this bill) are not normally
subject to parliamentary control. We agree that the policy here
is of sufficient public interest as to make a parliamentary procedure
appropriate.
Power to amend Acts — clause 93
13. Clause 93 lists a number of things for which
any order or regulations made under the bill by the Secretary
of State or Scottish Ministers may provide. These include making
incidental, supplementary and consequential provision or transitory
or transitional provisions or savings. In each case the provision
may include amending a provision of an Act of Parliament or the
Scottish Parliament, which includes Acts "whenever passed
or made". If the order or regulations amend an Act, the affirmative
procedure applies.
14. Subordinate legislation under any of the
powers in the bill may thus amend Acts as a consequence of that
subordinate legislation. Though such provisions are by no means
unprecedented, we do not consider they should be regarded as routine
and we are not in particular persuaded by paragraph 149 of the
memorandum that the power, if appropriate, should extend to amending
future Acts. The Government should either justify the extent
of this power or restrict its application to Acts passed before
the end of the current session, as is the power at clause 96(2)
which delegates a power to amend Acts in consequence of the bill
itself.
| 
